Crown Electrokinetics says EK film team solved 12-inch mastering challenge

Crown Electrokinetics issued a letter to its shareholders, which read in part, “As many of you know, Crown has been working towards achieving a path to develop its embossing master for 12-inch-wide film. The path that Crown embarked on quite some time ago involved combining its internal techniques with the efforts of its European vendor. I’m keenly aware that Crown has missed deadlines in the past, this communication is not meant to be an excuse, but rather an explanation. Crown is attempting to create something that has never been done before, technical discovery can often be inherently unpredictable. Crown has had many factors that delayed our mastering development, but with the delays came critical learning eventually leading to progress. I am happy to announce that Crown’s EK film team has solved the 12-inch mastering challenge for its “Gen 1″ smart window insert. While some minor refining is required, including some tooling replication, Crown is in a great position to start shipping first product in small quantities in July…Going forward, Crown expects to provide more details on product capabilities, timing, customer wins as well as pricing and expected revenue and margins. A little over a year ago, Crown made its first investment in the Fiber Optics construction market. The last 13 months have provided some hard lessons and taught Crown a great deal about not only the market, but also how to operate within it. Many of you were curious as to why Crown decided to initially move in this direction. While Crown was always confident that it could solve the mastering issue in its EK Film division, Crown could not ultimately predict exactly when that would occur. The decision to buy directional drilling assets in the fiber optics construction market in January of last year was done so in an effort to generate eventual revenue and earnings, benefiting shareholders while Crown reached the recent technological milestone described earlier. I am happy to let you know that Crown is generating revenue in both our Arizona market and in our recently announced Florida market. While Crown started servicing the Arizona market with its micro trenching and horizontal direction drilling, Crown has also been given opportunities to grow outside of the Arizona market. The opportunity in Florida is a direct result of the efforts of our recently announced President of Crown Fiber, Corey Boaz. Corey has not only positively affected Crown’s immediate revenue generation but has also brought to Crown an operating model that allows Crown to be cash flow positive on a project from day one. Corey also has market credibility and connections that has allowed him to build a significant pipeline of revenue generating projects. This pipeline, leveraged within his proven business model, is expected to generate positive cashflow in the near term. Analyzing the recently announced Florida opportunity, Crown has been awarded 300 miles of horizontal directional drilling as its first phase with estimated revenue of $11 million. Crown has already begun the work and, promisingly, have been meeting and surpassing production and margin targets every day. Crown expects it can scale production without the need to significantly hire more people, rather carefully selecting and leveraging known subcontractors at a guaranteed rate of production. This outsourced model allows Crown to lock in returns based on daily production and by adding more subcontractors, Crown can generate more revenue and earnings. With the work on the initial 300 miles underway, there remains an additional 800 miles that Crown expects to be awarded later.Crown announced in January that it would be providing revenue guidance in the February time frame. With all of the recent progress and developments, I have delayed this slightly. I am now expecting to have an investor call on Friday, March 8th. Please look for a subsequent announcement providing the details for our shareholders who would like to attend.”