Crown(US:CRKN)2024-11-15 21:26Revenue Performance - Revenue for the three months ended September 30, 2024, was $8.0 million, an increase of $8.0 million compared to zero in the same period in 2023, driven by new contracts in the Fiber Optics division and the Slant Wells group [157]. - Revenue for the nine months ended September 30, 2024, was $13.4 million, up $13.3 million from $0.1 million in the same period in 2023, attributed to new contracts in the Fiber Optics division and the new Slant Wells and Element 82 businesses [157]. Cost of Revenue - Cost of revenue for the three months ended September 30, 2024, was $6.6 million, compared to zero in the same period in 2023, reflecting increased subcontractor labor and equipment rental costs [158]. - Cost of revenue for the nine months ended September 30, 2024, was $12.4 million, an increase of $12.3 million from $0.1 million in the same period in 2023, primarily due to higher subcontractor labor and equipment rental costs [160]. Expenses - Research and development expenses for the three months ended September 30, 2024, were $0.7 million, up from $0.5 million in the same period in 2023, mainly due to increased salaries and benefits [161]. - General and administrative expenses for the three months ended September 30, 2024, were $6.5 million, an increase of $3.6 million from $2.9 million in the same period in 2023, driven by higher stock compensation and wages [163]. Net Loss - Net loss for the three months ended September 30, 2024, was $5.9 million, compared to a loss of $2.9 million in the same period in 2023, reflecting increased operating expenses [156]. - For the nine months ended September 30, 2024, the company reported a net loss of $15.5 million, compared to a net loss of $19.7 million for the same period in 2023, indicating an improvement in financial performance [181][188]. Cash Flow and Financing - Net cash used in operating activities for the nine months ended September 30, 2024, was $11.8 million, consistent with the same period in 2023, which also reported $11.8 million [181][188]. - As of September 30, 2024, the company had cash of $3.1 million, an increase of $1.0 million from $2.1 million at the end of September 30, 2023 [181]. - The company raised approximately $16.1 million from financing activities for the nine months ended September 30, 2024, compared to $14.8 million for the same period in 2023 [181][190]. - The company recorded a change in fair value of derivative liability of zero for the nine months ended September 30, 2024, compared to $0.4 million for the same period in 2023, reflecting the full settlement of derivatives [177]. - The company issued 1,740,027 shares of common stock in the first half of 2024, generating net proceeds of approximately $10.7 million at a weighted-average price of $6.93 per share [182]. - The company reported net cash used in investing activities of approximately $2.3 million for the nine months ended September 30, 2024, compared to $1.7 million for the same period in 2023 [189]. Accumulated Deficit and Going Concern - The company has an accumulated deficit of approximately $132.5 million as of September 30, 2024 [181]. - The company has expressed substantial doubt about its ability to continue as a going concern for the next twelve months due to uncertainty in raising additional capital [185]. Internal Controls and Compliance - As of September 30, 2024, the company concluded that its disclosure controls and procedures were not operating effectively [204]. - The company has engaged an external compliance consultant and additional staffing to develop a remediation plan for internal controls over financial reporting (ICFR) [204]. - During Q3 FY 2024, the company redesigned control procedures to focus on preventative and detective controls, establishing documentation to assess key control gaps [205]. - A thorough review of information technology controls was conducted, with a preliminary assessment indicating no material gaps exist [206]. - The estimated timeline for remediation of internal controls is by year-end 2024 [207]. - Management emphasized the importance of ethical conduct and internal controls, with escalation procedures for any arising questions to the CFO, CEO, or Board of Directors [208]. - Active remediation efforts were noted for establishing preventative and detective internal controls during the quarter ended September 30, 2024 [209]. - The company has not completed testing of controls for operating effectiveness, leading to the conclusion that the design and operating effectiveness of disclosure controls were not effective [210]. - Management's assessment identified a material weakness due to the reasonable possibility of undetected material errors [203]. Legal Claims - The company is involved in various legal claims, but does not expect these to have a material adverse effect on its financial position [213].