Crown Electrokinetics Corp. (NASDAQ:CRKN), a specialist in electronic components, announced on Monday that it has entered into a significant agreement with investment entity Liqueous, LP. According to details provided in a recent SEC filing, the agreement facilitates a potential sale of up to $100 million in new shares of Crown Electrokinetics' common stock to Liqueous.
Under the terms of the Common Stock Purchase Agreement dated August 31, 2024, Crown Electrokinetics has the right, but not the obligation, to sell shares to Liqueous, which, in turn, is committed to buying them. However, these sales can only begin once certain conditions are met, including SEC registration of the shares and the filing of a final form prospectus.
The agreement specifies that the purchase price for the shares will be set at 97% of the lowest daily volume-weighted average price (VWAP) of the two business days prior to the company issuing a sale notice to Liqueous. The deal also adheres to Nasdaq's Exchange Cap rule, which limits the number of shares that can be issued without shareholder approval to 19.99% of the company's total outstanding shares—a threshold Crown Electrokinetics has already secured approval to exceed at its Annual Meeting of Stockholders on June 14, 2024.
Additionally, Liqueous is restricted from acquiring shares that would result in ownership exceeding 4.99% of Crown Electrokinetics' outstanding common stock. Notably, the Purchase Agreement does not require Crown Electrokinetics to issue any shares as a commitment fee to Liqueous.
Concurrently with the Purchase Agreement, both parties have entered into a Registration Rights Agreement obligating Crown Electrokinetics to file a registration statement for the resale of the shares within 30 days, and to use commercially reasonable efforts to have it declared effective as soon as possible.
In other recent news, Crown Electrokinetics Corp. has been awarded two contracts for lead pipe remediation, totaling $33 million, marking its initial entry into this sector. The company also upgraded its third-quarter revenue guidance from $7 million-$8 million to $8 million-$9 million, following the acquisition of new contracts.
These contracts are part of Crown Electrokinetics' expansion in fiber optic network construction operations in Arizona and Oregon. Furthermore, the company secured an extra segment of a large-scale fiber project in Nevada, expected to generate an estimated $5.7 million in gross revenue.
Crown Electrokinetics has made changes to its accounting firm, switching from Marcum LLP to BPM LLP. The company also rectified an inadvertent omission in its annual financial report, which did not affect any financial results or other disclosures. In terms of compliance, Crown Electrokinetics regained Nasdaq compliance, an important step towards ensuring continued trading and investor confidence.
InvestingPro Insights
Crown Electrokinetics Corp.'s recent agreement with Liqueous, LP for a potential $100 million stock sale comes at a critical time for the company. According to InvestingPro data, CRKN's market capitalization stands at a modest $5.84 million, highlighting the significant potential impact of this funding opportunity.
InvestingPro Tips reveal that CRKN holds more cash than debt on its balance sheet, which could be further bolstered by this agreement. However, the company is also quickly burning through cash, underscoring the importance of this potential capital infusion.
Despite challenging financial metrics, including a negative gross profit margin of -22.62% in the last twelve months, analysts anticipate sales growth in the current year. This optimism is reflected in the expectation that CRKN will be profitable this year, potentially reversing its recent unprofitable streak.
Investors should note that CRKN's stock has experienced significant volatility, with a 20.69% return over the last week, but a -97.33% return over the past year. This context provides valuable insight into the company's current market position as it seeks to leverage this new funding agreement.
For those interested in a deeper analysis, InvestingPro offers 14 additional tips for CRKN, providing a comprehensive view of the company's financial health and market performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.