Crown(US:CRKN)2020-10-06 20:02PART I - FINANCIAL INFORMATION This section presents the company's unaudited financial information for the reporting period, including statements and related notes Financial Statements (Unaudited) This section presents the unaudited condensed financial statements for the quarter ended June 30, 2020, detailing the company's financial position, performance, and cash flows Condensed Balance Sheet Highlights (Unaudited) | Account | June 30, 2020 ($) | March 31, 2020 ($) | | :--- | :--- | :--- | | Total Assets | 912,091 | 388,636 | | Cash & cash equivalents | 591,851 | 48,307 | | Total Liabilities | 6,555,583 | 7,349,133 | | Notes payable, net | 2,215,403 | 3,083,158 | | Warrant liability | 2,314,152 | 1,733,718 | | Total stockholders' deficit | (5,643,492) | (6,960,497) | Condensed Statements of Operations (Unaudited) | Metric | Three Months Ended June 30, 2020 ($) | Three Months Ended June 30, 2019 ($) | | :--- | :--- | :--- | | Revenue | 0 | 0 | | Cost of revenue | 0 | 153,500 | | Loss from operations | (9,310,079) | (1,849,779) | | Research and development | 1,372,522 | 320,371 | | Selling, general and administrative | 7,937,557 | 1,375,908 | | Net loss | (10,462,030) | (2,225,250) | | Net loss per share, basic and diluted | (0.61) | (0.20) | Condensed Statements of Stockholders' Deficit - The total stockholders' deficit decreased from ($6,960,497) at March 31, 2020, to ($5,643,492) at June 30, 2020, primarily driven by $8.1 million in stock-based compensation and stock issuances offsetting a $10.5 million net loss for the quarter18 Condensed Statements of Cash Flows (Unaudited) | Activity | Three Months Ended June 30, 2020 ($) | Three Months Ended June 30, 2019 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | (1,286,656) | (692,397) | | Net cash used in investing activities | 0 | (26,603) | | Net cash provided by financing activities | 1,830,200 | 620,000 | | Net increase (decrease) in cash | 543,544 | (99,000) | | Cash — end of period | 591,851 | 447 | Notes to the Condensed Financial Statements (Unaudited) - The company has incurred substantial operating losses, with an accumulated deficit of approximately $26.9 million as of June 30, 2020, raising substantial doubt about its ability to continue as a going concern without additional financing262728 - On April 24, 2020, the company received a PPP Loan of $197,200 under the CARES Act, with a fixed interest rate of 1% and potential for forgiveness if used for qualifying expenses636465 - During the three months ended June 30, 2020, the company issued convertible notes with a principal balance of $2,081,000 for proceeds of approximately $2,050,000, resulting in an outstanding principal balance of approximately $3.4 million as of the report date88 - Total stock-based compensation expense for the three months ended June 30, 2020, was approximately $8.1 million, a significant increase from $1.1 million in the same period of 2019137 - Subsequent to the quarter end, on September 11, 2020, the company sold 1,390,000 shares and 695,000 warrants in a private placement for gross proceeds of approximately $1.7 million160 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's electrokinetic glass technology business, highlighting a significant increase in net loss to $10.5 million due to higher operating expenses and expressing substantial doubt about its going concern ability - The company is commercializing electrokinetic glass technology, an advancement on microfluidic technology originally developed by Hewlett-Packard Company165 Results of Operations Comparison (Unaudited) | Metric | Three Months Ended June 30, 2020 ($) | Three Months Ended June 30, 2019 ($) | | :--- | :--- | :--- | | Research and development | (1,372,522) | (320,371) | | Selling, general and administrative | (7,937,557) | (1,375,908) | | Net Loss | (10,462,030) | (2,225,250) | - The increase in R&D and SG&A expenses for the quarter ended June 30, 2020, was primarily due to significant non-cash stock-based compensation expenses for employees, officers, and the CEO173174 - Net cash provided by financing activities was $1.8 million for the three months ended June 30, 2020, mainly from the issuance of senior secured convertible notes and a PPP loan184 - The company has incurred substantial operating losses and has an accumulated deficit of approximately $26.9 million at June 30, 2020, raising substantial doubt about its ability to continue as a going concern176 Quantitative and Qualitative Disclosures About Market Risk As a Smaller Reporting Company, the company is not required to provide quantitative and qualitative disclosures regarding market risk - Disclosure is not required for a Smaller Reporting Company190 Controls and Procedures Management, including the CEO, evaluated and concluded that the company's disclosure controls and procedures were effective as of June 30, 2020, with no material changes in internal control over financial reporting - Management, including the CEO, evaluated the company's disclosure controls and procedures and concluded they are effective as of the quarter ended June 30, 2020193 - There were no changes in internal control over financial reporting during the fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal controls195 PART II - OTHER INFORMATION This section provides additional information including legal proceedings, risk factors, equity sales, defaults, and exhibits Legal Proceedings The company is actively defending itself in a lawsuit filed by Spencer Clarke LLC concerning a 2018 Placement Agent Agreement, disputing claims and filing counterclaims - Spencer Clarke LLC filed a lawsuit against the company in August 2019 concerning a 2018 Placement Agent Agreement, alleging failure to make payments198 - The company has filed an Answer and Counterclaims against Spencer Clarke, alleging breach of contract, anticipatory repudiation, and tortious interference, disputing owing any money198 Risk Factors The company identifies the COVID-19 pandemic as a significant and uncertain risk factor, potentially impacting its business, operations, and financial condition - The impact of the COVID-19 outbreak on the company's business, results of operations, and financial condition is uncertain and depends on future developments199201 - The company has modified business practices, including employee travel and work locations, in response to the pandemic, but there is no certainty these measures will be sufficient200 Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities occurred during the quarter, beyond those previously disclosed in Form 8-K filings - No unregistered sales of equity securities occurred during the period, other than those previously disclosed on Form 8-K202 Defaults Upon Senior Securities The company reported no defaults on senior securities during the current reporting period - None203 Mine Safety Disclosures This disclosure item is not applicable to the company's operations - N/A204 Other Information No additional information is reported for this period - N/A204 Exhibits This section lists the exhibits filed with the Form 10-Q, including required certifications and XBRL data files - The report includes certifications from the Principal Executive Officer and Principal Financial Officer pursuant to Sarbanes-Oxley Act Sections 302 and 906204205 - XBRL Instance Document and related taxonomy files are included as exhibits205206 Signatures This section contains the required signatures for the financial report, affirming its accuracy and completeness