Crown Electrokinetics Corp.

Good day, everyone, and welcome to Crown Electrokinetics Corporation earnings call for the first quarter 2022. At this time, participants are in a listen-only mode. A question and answer session will follow the manager's remarks. This conference call is being recorded. A replay of today's call will be available on the Investor Relations section of Crown's website and will remain posted there for the next 30 days. I will now hand the call over to Henrik Dubrovsky for introductions and the reading of the Safe Harbor Statement. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to Crown's earnings call for the first quarter 2022. With us today on today's call are Doug Croxall, Crown's chief executive officer and chairman, and Joel Kurtz, chief financial officer. Before we begin, I would like to remind you that today's call contains certain forward-looking statements from our management made with the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. Words such as may, should, projects, expects, intents, plans, beliefs, anticipates, hopes, estimates, and variations of such words and similar expressions are intended to identify forward-looking statements. These statements are subject to numerous conditions, many of which are beyond the control of the company, including those set forth in the risk factors section of the company's quarterly report on foreign thank you for the first quarter 2022 filed with the SEC. Copies of these documents are available on the SEC's website at www.sec.gov. Actual results may differ materially from those expressed or implied by such forward-looking statements. The company undertakes no obligation to update these statements for revisions or changes after the date of this call, except as required by law. Now, at this time, it is my pleasure to introduce Doug Croxo, CEO and Chairman of Crown. Mr. Croxo, please go ahead.

Thank you, Henrik. I'd like to thank everyone for joining us this morning for our Q1-22 Earnings Compass Call. We were informed the other day by our auditors that our 10Q will be filed on Monday the 16th as opposed to today, but we wanted to go ahead with our earnings call anyway. And the delay in the queue is purely a function of resource allocation and constraints with our auditor and has nothing to do with Crown or its financials. We'll begin by providing a business update of Crown after Joel, our CFO, will review the highlights of our financial results. We expect to take your questions after the presentations. Crown's mission is to provide affordable smart glass solution to the commercial real estate market that will enable its customers to reduce energy expenses and, in turn, lower carbon emissions. Our first product is called Smart Window Insert, powered by Dynamic Tint, an affordable solar-powered insert which does not require hard wiring and can be easily installed into the interior side of existing windows and commercial office buildings. Crown's dynamic tint, a pigment-based thin film initially developed by HP, is based on our proprietary and patent-protected electrokinetic technology. At Crown, we recognize that windows in commercial buildings are inefficient insulators, causing HVAC systems to use unnecessary amounts of energy, leading to increased energy spend and excessive carbon emissions. Crown Smart Window Insert easily installs into a building's existing window frame, leaving the existing window intact. This transforms a building's single-pane window into an energy-efficient dual-pane smart window. Once installed, the insert is powered by a solar strip, eliminating the need to have each smart window insert hardwired into the existing electrical system of the building. Crown Smart Window Insert absorbs sunlight, thereby reducing the amount of HVAC usage. leading to lower electricity costs and a smaller carbon footprint. Crown's insert also provides insulative benefit by effectively adding a second pane to the building's existing single pane, allowing heat and air conditioning to stay in the building more efficiently. The commercial building sector is under increasing pressure from shareholders, tenants, and regulators to reduce the HVAC energy consumption and reduce carbon emissions. As the only smart glass retrofit product in the marketplace, Crown's smart window insert is priced comparatively to high-end window blinds. The company constantly invests in research and development and has contributed to important research in energy conservation through improved efficiency of windows, including recent collaboration with the Lawrence Berkeley National Lab. Crown owns and operates a manufacturing facility and expects to deliver Its first production in summer 22. On previous earnings call, we announced that we had commenced a capital raise focused on raising sufficient debt capital to fund the purchase of two purpose-built lines to manufacture our electrokinetic film and to fund our growth. Those efforts are continuing, and I am very happy to announce today that we have received terms for debt funding that satisfies our capital requirements. We are expecting additional term sheets soon and will likely decide on which term sheet we will execute in the coming days. While I want to remain transparent with our investors, I'm sure that you understand why at this stage I cannot disclose any additional information. We remain confident in our approach and outcome of this process. Additionally, the company has secured a term sheet for equity funding at an above market price that when coupled with our debt funding, we believe will provide working capital until approximately the end of calendar year 2023. I shared in our last earnings call an update on our current product delivery status. I'll provide a brief update for the benefit of our shareholders. This summer, we will be manufacturing and delivering our first-generation smart window insert. That insert will be comprised of 12-inch strips of our dynamic tint film. Crown's insert will have the following capabilities. Our insert will have a solar strip that is facing the exterior of the building capturing sunlight to charge a lithium ion battery. The lithium ion battery will be the power source that allows the user to transition the film from clear to dark on demand. Each office that has our inserts will have a handheld controller that allows the occupants of the office to easily control the insert. Each insert will be gathering performance and usage data. which will be communicated to Crown to monitor the performance of our inserts. Our inserts are easily installed and will not require fasteners for installation. Each insert is powered by the solar strip attached to the exterior side of the insert, making our product highly sustainable and does not require hard wiring to the building's electrical system. We will have a limited run of the first generation insert to be sold and distributed to our three existing customers Metro Spaces, Hudson Pacific Properties, and recently announced Brandywine Realty Trust. Those three customers have a combined total of approximately 280 buildings. We will strategically place those inserts in a handful of buildings owned by our customers to get feedback on performance, design, and usage so that we can continue to iterate and develop our second generation window insert. Our second generation product, will incorporate a single piece of dynamic tin, replacing the 12-inch strips. We expect that new features will be incorporated into the second generation of our smart window inserts, potentially including the following upgrades. Increased data gathering, including but not limited to external weather information, the amount of sunlight, internal temperatures, placement of the sun during the day, and product use patterns. The second generation insert will have an accompanying app that will allow the user to control the inserts via a smart device in addition to the existing handheld controller. We expect that we will be able to produce significantly more second generation inserts as compared to the limited run of the first generation inserts. A year ago, we expected that one of our manufacturing partners would be producing our film as a contract manufacturer. However, due to business disruption from COVID, those plans changed for our partners, and we started down a path to vertically integrate all previously planned outsourced manufacturers. Today, Crown can manufacture its own film and will do so in Corvallis and Salem, Oregon facilities. I have in all my communications with shareholders and potential investors stressed the importance of what we have achieved in less than a year. This single and at that time difficult decision will increase our time to market, should increase our margins, and protect our intellectual property by manufacturing our own film. We are currently producing our film at a six-inch width and defect-free in our Corvallis R&D lab. We are working towards producing our film at 12-inch width, which will be the basis of our first-gen smart window insert. We've also developed a technique that we believe will allow us to produce film up to a 72-inch width, which is sufficiently wide enough to satisfy the U.S. building market. We call this technique stitching and have filed and will continue to file the proper protections on our invention. Our team of engineers, and one in particular, have given Crown the opportunity to significantly advance our time to market with wide web film. This breakthrough allows us to approach the commercial real estate market with a product that can have an immediate impact on a building's cost savings and carbon footprint. Last summer, we embarked upon a process to design a purpose-built line that can, in a single line, perform all the necessary steps in making our electrokinetic film. The conclusion of that process has provided us with a partner that will build our first roll-to-roll line capable of manufacturing our film at any width from 12 up to 72 inches. This new production line, once up and running, At capacity, we believe we'll produce annualized revenue of between $110 and $120 million and has the potential to generate EBITDA of approximately $20 million. As stated earlier, our intent is to use any debt capital to purchase two purpose-built lines, effectively doubling our output in both revenue and EBITDA. On May 2nd, we announced the appointment of Eddie Gordon as Vice President of Operations. Mr. Gordon has been supporting the company since July of 2021 as our senior manufacturing manager. He brings extensive knowledge and experience in scaling manufacturing operations. For over 30 years, he has gained broad engineering experience, quality control, materials, maintenance, human resources, and employee health and safety. As we transition from research and development to production, our operations has been more focused on manufacturing. Mr. Gordon's strong background in manufacturing and operations make him the perfect executive to lead Crown's operations. All efforts are currently directed towards our Generation 1.0 smart window insert launched this summer. As Vice President of Operations, Eddie will create an operational and manufacturing environment that will allow Crown to scale in the future to meet expected product demand. This first quarter, we announced the addition of a new customer to our growing list. Brandywine is our largest customer to date, with over 170 buildings in its portfolio, primarily in Philadelphia, Washington, D.C., and Austin, Texas. We will be delivering our first-generation insert to all three current customers this summer to specific locations as determined by Crown and our customers. It should be noted that we're experiencing interest not only from U.S.-based building owners, but also from commercial property owners in Europe, Middle East, and Asia. We will continue to work together with our prospective customers in our sales pipeline and hope to have further announcements in the coming quarters. Additionally, other markets, such as residential and transportation, continue to show interest. At the right time, we will address those market opportunities, but for the near term, we're focused on providing superior products to our current target customer, U.S. commercial office building market. We're incredibly pleased with the results of the third-party IT valuation report received this quarter. On April 4, we released a summary of this report to our shareholders and the market. The valuation conclusions in the private report are based on accepted practices using factual analysis, IT analysis, fair market value, and investment value standards. The third-party valuation firm utilized data provided by Crowns along with public information and industry knowledge of intellectual property licensing. In addition, the IP professional reviewed the historic costs as well as the expected future revenue as it relates to our assets. Brown's IP valuation indicated a combined patent and trade secret fair market value of $94.4 million. It is necessary to point out that our electrokinetic film technology can be applied to multiple product categories, including applications within the commercial building, residential home, and transportation industry. This IP valuation, however, specifically analyzed Crown's technology as deployed only in the U.S. office building market. The third-party IP valuation report reaffirms to our shareholders the substantial value of the company's underlying assets and intellectual property rights, not reflected in our current market values. Now I'll pass the call on to Joel, who will review our financial results.