UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period endedSeptember 30, 2017
or
☐ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Transition Period from to
Commission File No. 001-32919
Ascent Solar Technologies, Inc.
(Exact name of registrant as specified in its charter)
Delaware | 20-3672603 | |||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||
12300 Grant Street, Thornton, CO | 80241 | |||
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number including area code: 720-872-5000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of exchange on which registered |
Common | ASTI | Nasdaq Capital Markets |
Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of November 10, 2017,14, 2023, there were 8,931,765,8303,406,723 shares of our common stock issued and outstanding.
ASCENT SOLAR TECHNOLOGIES, INC.
Quarterly Report on Form 10-Q
For the Period Ended
September 30,Table of Contents
Item 1. | 1 | ||
1 | |||
2 | |||
3 | |||
5 | |||
6 | |||
Item 2. | 20 | ||
Item 3. | 25 | ||
Item 4. | 25 | ||
27 | |||
Item 1. | 27 | ||
Item 1A. | 27 | ||
Item 2. | 28 | ||
Item 3. | 28 | ||
Item 4. | 28 | ||
Item 5. | 28 | ||
Item 6. | 29 | ||
33 |
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes “forward-looking statements” that involve risks and uncertainties. Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future net sales or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, business trends and other information that is not historical information and, in particular, appear under headings including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Overview.” When used in this Quarterly Report, the words “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “forecasts,” “foresees,” “likely,” “may,” “should,” “goal,” “target,” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements are based upon information available to us on the date of this Quarterly Report.
These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of our control, that could cause actual results to differ materially from the results discussed in the forward-looking statements, including, among other things, the matters discussed in this Quarterly Report in the sections captioned “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Factors you should consider that could cause these differences are:
There may be other factors that could cause our actual results to differ materially from the results referred to in the forward-looking statements. We undertake no obligation to publicly update or revise forward-looking statements to reflect subsequent events or circumstances after the date made, or to reflect the occurrence of unanticipated events, except as required by law.
References to “we,” “us,” “our,” “Ascent,” “Ascent Solar” or the “Company” in this Quarterly Report mean Ascent Solar Technologies, Inc.
ASCENT SOLAR TECHNOLOGIES, INC.
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2017 | December 31, 2016 | |||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 1,083,029 | $ | 130,946 | ||||
Trade receivables, net of allowance for doubtful accounts of $48,201 and $60,347, respectively | 24,809 | 549,204 | ||||||
Inventories, net | 1,067,056 | 2,569,816 | ||||||
Prepaid expenses and other current assets | 394,511 | 983,796 | ||||||
Total current assets | 2,569,405 | 4,233,762 | ||||||
Property, Plant and Equipment | 36,645,862 | 36,639,460 | ||||||
Less accumulated depreciation and amortization | (31,873,054 | ) | (30,983,448 | ) | ||||
4,772,808 | 5,656,012 | |||||||
Other Assets: | ||||||||
Patents, net of accumulated amortization of $386,538 and $169,626, respectively | 1,502,576 | 1,647,505 | ||||||
Other non-current assets | 56,750 | 77,562 | ||||||
1,559,326 | 1,725,067 | |||||||
Total Assets | $ | 8,901,539 | $ | 11,614,841 | ||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | 631,263 | $ | 4,902,471 | ||||
Related party payables | 201,616 | 214,903 | ||||||
Accrued expenses | 1,480,733 | 1,469,684 | ||||||
Current portion of long-term debt | 337,791 | 243,113 | ||||||
Notes Payable | 1,587,760 | — | ||||||
Promissory Notes, net of discount of $2,627,529 and zero, respectively | 1,535,912 | 1,430,000 | ||||||
Current portion of litigation settlement | — | 339,481 | ||||||
Series E preferred stock, net of discount of $63,640 | — | 56,360 | ||||||
Series F preferred stock | 140,001 | 160,001 | ||||||
Series G preferred stock, net of discount of $699,674 | — | 408,326 | ||||||
July 2016 convertible notes, net of discount of $1,634,357 | — | 1,159,610 | ||||||
Series I exchange notes, net of discount of $199,474 | — | 26,597 | ||||||
Series J preferred stock | 1,075,000 | 1,350,000 | ||||||
October 2016 convertible notes, net of discount of $66,000 and $264,000 respectively | 264,000 | 66,000 | ||||||
St. George convertible note, net of discount and cash payment premium of $817,506 and zero, respectively | 1,079,994 | |||||||
Tertius Financial Group promissory notes, net of discount of $59,658 | — | 542,808 | ||||||
Short term embedded derivative liabilities | 2,412,212 | 6,578,154 | ||||||
Make-whole dividend liability | 264,289 | 500,176 | ||||||
Total current liabilities | 11,010,571 | 19,447,684 | ||||||
Long-Term Debt | 5,206,403 | 5,281,776 | ||||||
Series K preferred stock | 2,810,000 | — | ||||||
Accrued Warranty Liability | 105,102 | 176,457 | ||||||
Commitments and Contingencies (Notes 4 & 23) | ||||||||
Mezzanine Equity: | ||||||||
Series J-1 preferred stock: 700 shares authorized; zero and 700 and issued and outstanding as of September 30, 2017 and December 31, 2016, respectively | — | 700,000 | ||||||
Stockholders’ Deficit: | ||||||||
Series A preferred stock, $.0001 par value; 750,000 shares authorized and issued; 60,756 shares and 125,044 shares outstanding as of September 30, 2017 and December 31, 2016, respectively ($746,550 and $1,500,528 Liquidation Preference) | 6 | 13 | ||||||
Common stock, $0.0001 par value, 20,000,000,000 shares authorized; 8,717,859,917 and 554,223,320 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively | 871,786 | 55,422 | ||||||
Additional paid in capital | 385,479,540 | 369,886,065 | ||||||
Accumulated deficit | (396,581,869 | ) | (383,932,576 | ) | ||||
Total stockholders’ deficit | (10,230,537 | ) | (13,991,076 | ) | ||||
Total Liabilities, Mezzanine Equity and Stockholders’ Deficit | $ | 8,901,539 | $ | 11,614,841 |
(unaudited)
|
| September 30, |
|
| December 31, |
| ||
|
| 2023 |
|
| 2022 |
| ||
ASSETS |
|
|
|
|
|
| ||
Current Assets: |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 2,249,764 |
|
| $ | 11,483,018 |
|
Trade receivables, net of allowance of $0 and $26,000, respectively |
|
| - |
|
|
| 1,769 |
|
Inventories, net |
|
| 636,019 |
|
|
| 615,283 |
|
Prepaid and other current assets |
|
| 258,691 |
|
|
| 344,110 |
|
Total current assets |
|
| 3,144,474 |
|
|
| 12,444,180 |
|
|
|
|
|
|
|
| ||
Property, Plant and Equipment: |
|
| 24,182,295 |
|
|
| 22,590,169 |
|
Accumulated depreciation |
|
| (20,125,328 | ) |
|
| (22,038,508 | ) |
Property, Plant and Equipment, net |
|
| 4,056,967 |
|
|
| 551,661 |
|
|
|
|
|
|
| |||
Other Assets: |
|
|
|
|
|
| ||
Operating lease right-of-use assets, net |
|
| 2,476,958 |
|
|
| 4,324,514 |
|
Patents, net of accumulated amortization of $168,595 and $154,218 |
|
| 84,925 |
|
|
| 79,983 |
|
Equity method investment |
|
| 65,779 |
|
|
| 61,379 |
|
Other non-current assets |
|
| 1,327,543 |
|
|
| 1,214,985 |
|
|
|
| 3,955,205 |
|
|
| 5,680,861 |
|
Total Assets |
| $ | 11,156,646 |
|
| $ | 18,676,702 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |
|
|
|
|
|
| ||
Current Liabilities: |
|
|
|
|
|
| ||
Accounts payable |
| $ | 1,300,814 |
|
| $ | 595,157 |
|
Related party payables |
|
| 27,885 |
|
|
| 67,164 |
|
Accrued expenses |
|
| 984,568 |
|
|
| 888,869 |
|
Accrued payroll |
|
| 585,774 |
|
|
| 927,264 |
|
Accrued professional services fees |
|
| 791,679 |
|
|
| 952,573 |
|
Accrued interest |
|
| 668,495 |
|
|
| 559,060 |
|
Current portion of operating lease liability |
|
| 471,497 |
|
|
| 733,572 |
|
Conversions payable (Note 11) |
|
| 6,470,540 |
|
|
| - |
|
Current portion of convertible notes, net |
|
| 319,541 |
|
|
| - |
|
Other payable |
|
| 250,000 |
|
|
| 250,000 |
|
Total current liabilities |
|
| 11,870,793 |
|
|
| 4,973,659 |
|
Long-Term Liabilities: |
|
|
|
|
|
| ||
Non-current operating lease liabilities |
|
| 2,171,440 |
|
|
| 3,827,878 |
|
Non-current convertible notes, net |
|
| - |
|
|
| 5,268,399 |
|
Accrued warranty liability |
|
| 21,225 |
|
|
| 21,225 |
|
Total liabilities |
|
| 14,063,458 |
|
|
| 14,091,161 |
|
Commitments and contingencies (Note 16) |
|
|
|
|
|
| ||
Stockholders’ Equity (Deficit): |
|
|
|
|
|
| ||
Series A preferred stock, $.0001 par value; 750,000 shares authorized; 48,100 |
|
| 5 |
|
|
| 5 |
|
Common stock, $0.0001 par value, 500,000,000 authorized; 549,199 |
|
| 55 |
|
|
| 26 |
|
Additional paid in capital |
|
| 468,075,287 |
|
|
| 452,139,027 |
|
Accumulated deficit |
|
| (470,987,945 | ) |
|
| (447,537,493 | ) |
Accumulated other comprehensive loss |
|
| 5,786 |
|
|
| (16,024 | ) |
Total stockholders’ equity (deficit) |
|
| (2,906,812 | ) |
|
| 4,585,541 |
|
Total Liabilities and Stockholders’ Equity (Deficit) |
| $ | 11,156,646 |
|
| $ | 18,676,702 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Products, net | $ | 242,055 | $ | 436,708 | $ | 547,792 | $ | 1,369,823 | ||||||||
Government contracts | — | 15,966 | — | 48,396 | ||||||||||||
Revenues | $ | 242,055 | $ | 452,674 | $ | 547,792 | $ | 1,418,219 | ||||||||
Costs and Expenses: | ||||||||||||||||
Cost of revenues (exclusive of depreciation shown below) | 535,258 | 1,332,153 | 2,323,125 | 4,769,059 | ||||||||||||
Research, development and manufacturing operations (exclusive of depreciation shown below) | 1,311,944 | 1,660,203 | 3,829,918 | 5,131,969 | ||||||||||||
Inventory impairment costs | — | — | 363,758 | — | ||||||||||||
Selling, general and administrative (exclusive of depreciation shown below) | 1,341,850 | 2,576,297 | 4,511,944 | 8,519,993 | ||||||||||||
Depreciation and amortization | 310,207 | 422,971 | 1,012,183 | 3,180,529 | ||||||||||||
Total Costs and Expenses | 3,499,259 | 5,991,624 | 12,040,928 | 21,601,550 | ||||||||||||
Loss from Operations | (3,257,204 | ) | (5,538,950 | ) | (11,493,136 | ) | (20,183,331 | ) | ||||||||
Other Income/(Expense) | ||||||||||||||||
Other Income/(Expense), net | (15,053 | ) | 42,789 | 564,093 | 75,122 | |||||||||||
Interest expense | (898,916 | ) | (1,789,599 | ) | (5,137,975 | ) | (5,442,591 | ) | ||||||||
Warrant Expense | (335,739 | ) | — | (335,739 | ) | — | ||||||||||
Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net | 2,151,478 | (4,500,151 | ) | 3,753,465 | (7,928,578 | ) | ||||||||||
Total Other Income/(Expense) | 901,770 | (6,246,961 | ) | (1,156,156 | ) | (13,296,047 | ) | |||||||||
Net Loss | $ | (2,355,434 | ) | $ | (11,785,911 | ) | $ | (12,649,292 | ) | $ | (33,479,378 | ) | ||||
Net Loss Per Share (Basic and diluted) | $ | (0.0003 | ) | $ | (0.1457 | ) | $ | (0.0026 | ) | $ | (0.9350 | ) | ||||
Weighted Average Common Shares Outstanding (Basic and diluted) | 8,062,351,305 | 80,896,300 | 4,806,752,298 | 35,806,147 |
(unaudited)
| Three Months Ended |
|
| Nine Months Ended |
| ||||||||||
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Revenues |
|
|
|
|
|
|
|
|
|
|
| ||||
Products | $ | 209,496 |
|
| $ | 6,344 |
|
| $ | 395,106 |
|
| $ | 688,125 |
|
Milestone and engineering |
| 20,458 |
|
|
| - |
|
|
| 60,374 |
|
|
| 522,000 |
|
Total Revenues |
| 229,954 |
|
|
| 6,344 |
|
|
| 455,480 |
|
|
| 1,210,125 |
|
Costs and Expenses |
|
|
|
|
|
|
|
|
|
|
| ||||
Costs of revenue |
| 692,752 |
|
|
| 409,819 |
|
|
| 1,820,816 |
|
|
| 1,519,703 |
|
Research, development and manufacturing |
| 344,942 |
|
|
| 1,540,170 |
|
|
| 2,832,956 |
|
|
| 4,399,765 |
|
Selling, general and administrative |
| 1,407,493 |
|
|
| 1,890,218 |
|
|
| 4,178,146 |
|
|
| 3,583,366 |
|
Share-based compensation |
| 139,067 |
|
|
| 3,796,151 |
|
|
| 2,104,378 |
|
|
| 3,796,151 |
|
Depreciation and amortization |
| 23,723 |
|
|
| 20,497 |
|
|
| 73,947 |
|
|
| 54,998 |
|
Total Costs and Expenses |
| 2,607,977 |
|
|
| 7,656,855 |
|
|
| 11,010,243 |
|
|
| 13,353,983 |
|
Loss from Operations |
| (2,378,023 | ) |
|
| (7,650,511 | ) |
|
| (10,554,763 | ) |
|
| (12,143,858 | ) |
Other Income/(Expense) |
|
|
|
|
|
|
|
|
|
|
| ||||
Other income/(expense), net |
| 756,859 |
|
|
| 20,000 |
|
|
| 766,859 |
|
|
| 22,000 |
|
Interest expense |
| (288,109 | ) |
|
| (252,571 | ) |
|
| (2,118,023 | ) |
|
| (2,371,256 | ) |
Total Other Income/(Expense) |
| 468,750 |
|
|
| (232,571 | ) |
|
| (1,351,164 | ) |
|
| (2,349,256 | ) |
Income/(Loss) on Equity Method Investments |
| - |
|
|
| (27,484 | ) |
|
| (170 | ) |
|
| (27,486 | ) |
Net Income/(Loss) |
| (1,909,273 | ) |
|
| (7,910,566 | ) |
|
| (11,906,097 | ) |
|
| (14,520,600 | ) |
Net Income/(Loss) Per Share (Basic and Diluted) | $ | (4.04 | ) |
| $ | (47.71 | ) |
| $ | (66.40 | ) |
| $ | (101.70 | ) |
Weighted Average Common Shares |
| 473,159 |
|
|
| 165,795 |
|
|
| 354,830 |
|
|
| 14,277 |
|
Weighted Average Common Shares |
| 473,159 |
|
|
| 165,795 |
|
|
| 354,830 |
|
|
| 14,277 |
|
Other Comprehensive Income/(Loss) |
|
|
|
|
|
|
|
|
|
|
| ||||
Foreign currency translation gain/(loss) |
| 19,940 |
|
|
| (2,671 | ) |
|
| 21,810 |
|
|
| (16,024 | ) |
Net Comprehensive Income/(Loss) | $ | (1,889,333 | ) |
| $ | (7,913,237 | ) |
| $ | (11,884,287 | ) |
| $ | (14,536,624 | ) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended | |||||||||
September 30, | |||||||||
2017 | 2016 | ||||||||
Operating Activities: | |||||||||
Net loss | $ | (12,649,292 | ) | $ | (33,479,378 | ) | |||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||
Depreciation and amortization | 1,012,183 | 3,180,529 | |||||||
Share based compensation | 108,717 | 708,776 | |||||||
Warrant expense | 335,739 | — | |||||||
Realized gain on sale of assets | (1,199,606 | ) | — | ||||||
Amortization of financing costs to interest expense | 73,018 | 125,902 | |||||||
Write down of previously capitalized inventory | 363,758 | — | |||||||
Non-cash interest expense | 1,273,087 | 298,149 | |||||||
Amortization of debt discount | 3,656,430 | 4,437,611 | |||||||
Change in fair value of derivatives and (gain)/loss on extinguishment of liabilities, net | (3,753,465 | ) | 7,928,578 | ||||||
Inducement conversion costs | 635,514 | — | |||||||
Bad debt expense | 514 | 246,116 | |||||||
Changes in operating assets and liabilities: | |||||||||
Accounts receivable | 545,481 | 1,506,462 | |||||||
Inventories | 1,139,001 | 813,735 | |||||||
Prepaid expenses and other current assets | 493,008 | 497,325 | |||||||
Accounts payable | (1,469,670 | ) | 382,738 | ||||||
Related party payable | (13,287 | ) | — | ||||||
Accrued expenses | (850,314 | ) | 238,768 | ||||||
Accrued litigation settlement | (339,481 | ) | (401,268 | ) | |||||
Warranty reserve | (71,355 | ) | (34,834 | ) | |||||
Net cash used in operating activities | (10,710,020 | ) | (13,550,791 | ) | |||||
Investing Activities: | |||||||||
Purchase of property, plant and equipment | (6,402 | ) | (40,262 | ) | |||||
Proceeds from the sale of assets | 150,000 | — | |||||||
Patent activity costs | (50,898 | ) | (152,076 | ) | |||||
Net cash provided by/(used in) investing activities | 92,700 | (192,338 | ) | ||||||
Financing Activities: | |||||||||
Payment of debt financing costs | (20,000 | ) | (40,000 | ) | |||||
Repayment of debt | (1,785,597 | ) | (211,648 | ) | |||||
Proceeds from the issuance of promissory notes | 2,865,000 | 300,000 | |||||||
Proceeds from convertible notes | 1,500,000 | 2,000,000 | |||||||
Proceeds from Committed Equity Line | — | 1,056,147 | |||||||
Proceeds from issuance of stock and warrants | 9,010,000 | 10,405,000 | |||||||
Net cash provided by financing activities | 11,569,403 | 13,509,499 | |||||||
Net change in cash and cash equivalents | 952,083 | (233,630 | ) | ||||||
Cash and cash equivalents at beginning of period | 130,946 | 326,217 | |||||||
Cash and cash equivalents at end of period | $ | 1,083,029 | $ | 92,587 | |||||
Supplemental Cash Flow Information: | |||||||||
Cash paid for interest | $ | 1,120,350 | $ | 267,666 | |||||
Non-Cash Transactions: | |||||||||
Non-cash conversions of preferred stock and convertible notes to equity | $ | 10,914,988 | $ | 9,236,810 | |||||
Make-whole provision on convertible preferred stock | $ | 257,152 | $ | — | |||||
Non-cash financing costs | $ | 2,500 | $ | — | |||||
Accounts payable converted to notes payable | $ | 1,637,260 | $ | — | |||||
Accounts payable forgiven related to sale of EnerPlex | $ | 1,031,726 | $ | — | |||||
Interest converted to principal | $ | 104,199 | $ | — | |||||
Common shares issued for commitment fee | $ | 63,750 | $ | — |
(unaudited)
For the Three and Nine Months Ended September 30, 2023
|
| Series A |
|
| Series 1B |
|
| Common Stock |
|
| Additional |
|
| Accumulated |
|
| Other Accumulated Comprehensive |
|
| Total |
| |||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Loss |
|
| (Deficit) |
| ||||||||||
Balance at January 1, 2023 |
|
| 48,100 |
|
| $ | 5 |
|
|
| - |
|
| $ | - |
|
|
| 259,323 |
|
| $ | 26 |
|
| $ | 452,139,027 |
|
| $ | (447,537,493 | ) |
| $ | (16,024 | ) |
| $ | 4,585,541 |
|
Impact of adopting ASU 2020-06 |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (3,795,874 | ) |
|
| 109,631 |
|
|
| - |
|
|
| (3,686,243 | ) |
Balance at January 1, 2023, as adjusted |
|
| 48,100 |
|
| $ | 5 |
|
|
| - |
|
| $ | - |
|
|
| 259,323 |
|
| $ | 26 |
|
| $ | 448,343,153 |
|
| $ | (447,427,862 | ) |
| $ | (16,024 | ) |
| $ | 899,298 |
|
Conversion of L1 Note |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 45,129 |
|
|
| 5 |
|
|
| 1,240,813 |
|
|
| - |
|
|
| - |
|
|
| 1,240,818 |
|
Conversion of Sabby Note into |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 63,030 |
|
|
| 6 |
|
|
| 2,123,643 |
|
|
| - |
|
|
| - |
|
|
| 2,123,649 |
|
Share-based compensation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,965,311 |
|
|
| - |
|
|
| - |
|
|
| 1,965,311 |
|
Common stock issued for services |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,425 |
|
|
| - |
|
|
| 92,750 |
|
|
| - |
|
|
| - |
|
|
| 92,750 |
|
Proceeds from issurance of |
|
| - |
|
|
| - |
|
|
| 900 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 900,000 |
|
|
| - |
|
|
| - |
|
|
| 900,000 |
|
Preferred Stock issuance cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (20,000 | ) |
|
|
|
|
|
|
|
| (20,000 | ) | ||||||||
Down round deemed dividend |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 11,653,986 |
|
|
| (11,653,986 | ) |
|
| - |
|
|
| - |
|
Net Loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (9,996,824 | ) |
|
| - |
|
|
| (9,996,824 | ) |
Foreign Currency Translation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,870 |
|
|
| 1,870 |
|
Balance at June 30, 2023 |
|
| 48,100 |
|
| $ | 5 |
|
|
| 900 |
|
| $ | - |
|
|
| 368,907 |
|
| $ | 37 |
|
| $ | 466,299,656 |
|
| $ | (469,078,672 | ) |
| $ | (14,154 | ) |
| $ | (2,793,128 | ) |
Conversion of L1 Note |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 106,250 |
|
|
| 11 |
|
|
| (603,668 | ) |
|
| - |
|
|
| - |
|
|
| (603,657 | ) |
Conversion of Sabby Note into |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 74,042 |
|
|
| 7 |
|
|
| 151,942 |
|
|
| - |
|
|
| - |
|
|
| 151,949 |
|
Prepayment of Common Stock |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,088,290 |
|
|
| - |
|
|
| - |
|
|
| 2,088,290 |
|
Share-based compensation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 139,067 |
|
|
| - |
|
|
| - |
|
|
| 139,067 |
|
Net Loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,909,273 | ) |
|
| - |
|
|
| (1,909,273 | ) |
Foreign Currency Translation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 19,940 |
|
|
| 19,940 |
|
Balance at September 30, 2023 |
|
| 48,100 |
|
| $ | 5 |
|
|
| 900 |
|
| $ | - |
|
|
| 549,199 |
|
| $ | 55 |
|
| $ | 468,075,287 |
|
| $ | (470,987,945 | ) |
| $ | 5,786 |
|
| $ | (2,906,812 | ) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(unaudited)
For the Three and Nine Months Ended September 30, 2022
|
| Series A |
|
| Series 1A |
|
| Common Stock |
|
| Additional |
|
| Accumulated |
|
| Other Accumulated Comprehensive |
|
| Total |
| |||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Loss |
|
| (Deficit) |
| ||||||||||
Balance at January 1, 2022 |
|
| 48,100 |
|
| $ | 5 |
|
|
| 3,700 |
|
| $ | - |
|
|
| 113,256 |
|
| $ | 12 |
|
| $ | 424,949,165 |
|
| $ | (427,782,788 | ) |
| $ | - |
|
| $ | (2,833,606 | ) |
Conversion of TubeSolar Series 1A |
|
| - |
|
|
| - |
|
|
| (2,400 | ) |
|
| - |
|
|
| 24,000 |
|
|
| 2 |
|
|
| (2 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
Conversion of Crowdex Series 1A |
|
| - |
|
|
| - |
|
|
| (1,300 | ) |
|
| - |
|
|
| 13,000 |
|
|
| 1 |
|
|
| (1 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
Conversion of BD1 Note |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 79,000 |
|
|
| 8 |
|
|
| 7,899,992 |
|
|
| - |
|
|
| - |
|
|
| 7,900,000 |
|
Conversion of Nanyang Note |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 6,000 |
|
|
| 1 |
|
|
| 599,999 |
|
|
| - |
|
|
| - |
|
|
| 600,000 |
|
Conversion of Fleur Note into |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 7,000 |
|
|
| 1 |
|
|
| 699,999 |
|
|
| - |
|
|
| - |
|
|
| 700,000 |
|
Net Loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (6,610,034 | ) |
|
| - |
|
|
| (6,610,034 | ) |
Foreign Currency Translation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (13,353 | ) |
|
| (13,353 | ) |
Balance at June 30, 2022 |
|
| 48,100 |
|
| $ | 5 |
|
|
| - |
|
| $ | - |
|
|
| 242,256 |
|
| $ | 25 |
|
| $ | 434,149,152 |
|
| $ | (434,392,822 | ) |
| $ | (13,353 | ) |
| $ | (256,993 | ) |
Conversion of Nanyang Note |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 9,000 |
|
|
| 1 |
|
|
| 899,999 |
|
|
| - |
|
|
| - |
|
|
| 900,000 |
|
Conversion of Fleur Note into |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,000 |
|
|
| - |
|
|
| 300,000 |
|
|
| - |
|
|
| - |
|
|
| 300,000 |
|
Proceeds from private placement: |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
| |
Common stock (8/19 @$540) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 4,717 |
|
|
| - |
|
|
| 2,551,405 |
|
|
| - |
|
|
| - |
|
|
| 2,551,405 |
|
Warrants (8/19 @ $346) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,448,595 |
|
|
| - |
|
|
| - |
|
|
| 2,448,595 |
|
Private placement costs |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (119,617 | ) |
|
| - |
|
|
| - |
|
|
| (119,617 | ) |
Share-based compensation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,796,150 |
|
|
| - |
|
|
| - |
|
|
| 3,796,150 |
|
Net Loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (7,910,566 | ) |
|
| - |
|
|
| (7,910,566 | ) |
Foreign Currency Translation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (2,671 | ) |
|
| (2,671 | ) |
Balance at September 30, 2022 |
|
| 48,100 |
|
| $ | 5 |
|
|
| - |
|
| $ | - |
|
|
| 258,973 |
|
| $ | 26 |
|
| $ | 444,025,684 |
|
| $ | (442,303,388 | ) |
| $ | (16,024 | ) |
| $ | 1,706,303 |
|
The accompanying notes are an integral part of these unaudited condensed financial statements.
4
ASCENT SOLAR TECHNOLOGIES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
|
| For the Nine Months Ended |
| |||||
|
| September 30, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
Operating Activities: |
|
|
|
|
|
| ||
Net income/(loss) |
| $ | (11,906,097 | ) |
| $ | (14,520,600 | ) |
Adjustments to reconcile net income (loss) to cash used in operating activities: |
|
|
|
|
|
| ||
Depreciation and amortization |
|
| 73,947 |
|
|
| 54,998 |
|
Share-based compensation |
|
| 2,104,378 |
|
|
| 3,796,150 |
|
Services paid in common stock |
|
| 92,750 |
|
|
| — |
|
Gain on lease modification |
|
| (84,678 | ) |
|
| — |
|
Loss on disposal of assets |
|
| 77,210 |
|
|
| — |
|
Operating lease asset amortization |
|
| 555,240 |
|
|
| 515,803 |
|
Amortization of debt discount |
|
| 1,773,621 |
|
|
| 2,323,153 |
|
Inventory reserve expense |
|
| 111,028 |
|
|
| — |
|
Loss on equity method investment |
|
| 170 |
|
|
| 27,486 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
| ||
Accounts receivable |
|
| 1,769 |
|
|
| (62,750 | ) |
Inventories |
|
| (131,764 | ) |
|
| (92,213 | ) |
Prepaid expenses and other current assets |
|
| (27,139 | ) |
|
| (746,922 | ) |
Accounts payable |
|
| 705,657 |
|
|
| 74,889 |
|
Related party payable |
|
| (39,279 | ) |
|
| (2,334 | ) |
Operating lease liabilities |
|
| (541,519 | ) |
|
| (486,848 | ) |
Accrued interest |
|
| 109,435 |
|
|
| 45,825 |
|
Accrued expenses |
|
| (204,127 | ) |
|
| 1,147,577 |
|
Net cash used in operating activities |
|
| (7,329,398 | ) |
|
| (7,925,786 | ) |
Investing Activities: |
|
|
|
|
|
| ||
Contributions to equity method investment |
|
| — |
|
|
| (83,559 | ) |
Payments on purchase of assets |
|
| (3,844,644 | ) |
|
| (94,140 | ) |
Patent activity costs |
|
| (19,319 | ) |
|
| (8,004 | ) |
Net cash used in investing activities |
|
| (3,863,963 | ) |
|
| (185,703 | ) |
Financing Activities: |
|
|
|
|
|
| ||
Proceeds from issuance of Series 1B Preferred Stock |
|
| 880,000 |
|
|
| — |
|
Proceeds from issuance of bridge loan |
|
| — |
|
|
| 1,000,000 |
|
Proceeds from issuance of stock and warrants |
|
| — |
|
|
| 4,000,000 |
|
Prepayment of Equity Offering |
|
| 2,088,290 |
|
|
| — |
|
Payment of convertible notes |
|
| (1,025,423 | ) |
|
| — |
|
Net cash provided by financing activities |
|
| 1,942,867 |
|
|
| 5,000,000 |
|
Effect of foreign exchange rate on cash |
|
| 17,240 |
|
|
| — |
|
Net change in cash and cash equivalents |
|
| (9,233,254 | ) |
|
| (3,111,489 | ) |
Cash and cash equivalents at beginning of period |
|
| 11,483,018 |
|
|
| 5,961,760 |
|
Cash and cash equivalents at end of period |
| $ | 2,249,764 |
|
| $ | 2,850,271 |
|
Non-Cash Transactions: |
|
|
|
|
|
| ||
Conversion of bridge loan into common stock and warrants |
| $ | — |
|
| $ | 1,000,000 |
|
Right-of-use assets acquired through operating lease liabilities |
| $ | — |
|
| $ | 21,045 |
|
Purchase and return of equipment purchased on credit |
| $ | (202,556 | ) |
| $ | 202,556 |
|
Non-cash conversions of convertible notes to equity |
| $ | 2,912,759 |
|
| $ | 10,400,000 |
|
Series 1A preferred stock conversion |
| $ | — |
|
| $ | 740 |
|
Down round deemed dividend |
| $ | 11,653,986 |
|
| $ | — |
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
| ||
Cash paid during the year for: |
|
|
|
|
|
| ||
Interest |
| $ | 233,436 |
|
| $ | — |
|
The accompanying notes are an integral part of these unaudited condensed financial statements.
5
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION
Ascent Solar Technologies, Inc. (“Ascent”(the “Company") was incorporated on October 18, 2005 from the separation of ITN Energy Systems, Inc's (“ITN”) Advanced Photovoltaic Division and all of that division’s key personnel and core technologies. ITN, a private company incorporated in 1994, is an incubator dedicated to the development of thin-film, photovoltaic (“PV”), battery, fuel cell, and nano technologies. Through its work on research and development contracts for private and governmental entities, ITN developed proprietary processing and manufacturing know-how applicable to PV products generally, and to Copper-Indium-Gallium-diSelenide (“CIGS”) PV products in particular. ITN formed Ascent to commercialize its investment in CIGS PV technologies. In January 2006, in exchange for 5,140 shares of common stock of Ascent, ITN assigned to Ascent certain CIGS PV technologies and trade secrets and granted to Ascent a perpetual, exclusive, royalty-free worldwide license to use, in connection with the manufacture, development, marketing and commercialization of CIGS PV to produce solar power, certain of ITN’s existing and future proprietary and control technologies that, although non-specific to CIGS PV, Ascent believes will be useful in its production of PV modules for its target markets. Upon receipt of the necessary government approvals and pursuant to novation in early 2007, ITN assigned government-funded research and development contracts to Ascent and also transferred the key personnel working on the contracts to Ascent.
On March 13, 2023, the Company redeployed its Thornton manufacturing facility as a Perovskite Center of EnerPlex Brand
On September 11, 2023, the Company effected a reverse stock split of the Company’s common stock at a ratio of one-for-two hundred (the “Reverse Stock Split”). The Company’s common stock began trading on a split-adjusted basis on September 12, 2023. Stockholders also received one whole share of common stock in lieu of a fractional share and trademarks associated with EnerPlex to our battery product supplier, Sun Pleasure Co. Limited (“SPCL”), in an effort to better allocate its resourcesno fractional shares were issued. All shares and to continue to focus on its core strengthper share amounts in the high-value specialty PV market. Following the transfer, Ascent will no longer produce or sell Enerplex-branded consumer products. Ascent will also supply solar PV productsunaudited condensed financial statements and accompanying notes have been retroactively adjusted to SPCL, supporting the continuous growth of EnerPlex™ with Ascent’s proprietary and award-winning thin-film solar technologies and products.
NOTE 2. BASIS OF PRESENTATION
The accompanying, unaudited, condensed consolidated financial statements have been derived from the accounting records of Ascent Solar Technologies, Inc., Ascent Solar (Asia) Pte. Ltd., and Ascent Solar (Shenzhen) Co., Ltd. (collectively, "the Company")the Company as of September 30, 20172023, and December 31, 2016,2022, and the results of operations for the three and nine months ended September 30, 20172023, and 2016. Ascent Solar (Shenzhen) Co., Ltd. is wholly owned by Ascent Solar (Asia) Pte. Ltd., which is wholly owned by Ascent Solar Technologies, Inc. All significant inter-company balances and transactions have been eliminated in the accompanying condensed consolidated financial statements.
The accompanying, unaudited, condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, these interim financial statements do not include all of the information and footnotes typically found in U.S. GAAP audited annual financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement have been included. The Condensed Consolidated Balance Sheet at
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Operating results for the
three and nine months ended September 30,NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company’s significant accounting policies were described in Note 3 to the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended
December 31,6
Revenue from Contracts with Customers (Topic 606)
Product revenue. The update will establish a comprehensiveCompany recognizes revenue recognition standard for virtually all industries in GAAP. ASU 2014-09 will change the amount and timing of revenue and cost recognition, implementation, disclosures and documentation. In August 2015, the FASB issued ASU No. 2015-14,
During the three months ended September 30, 2023 and 2022, the Company recognized product revenue of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU 2017-09 is effective for interim periods$209,496 and fiscal years beginning after December 15, 2017, and early application is permitted. The Company is currently evaluating the impact, if any, that the adoption of this guidance will have on its consolidated financial statements.
Milestone and engineering revenue. Each milestone and engineering arrangement is a separate performance obligation. The transaction price is estimated using the most likely amount method and revenue is recognized as the performance obligation is satisfied through achieving manufacturing, cost, or engineering targets. During the three months ended September 30, 2023 and 2022, the Company recognized total milestone and engineering revenue of $20,458 and $–, respectively. During the nine months ended September 30, 2023 and 2022, the Company recognized total milestone and engineering revenue of $60,374 and $522,000, respectively. $512,000 of the $522,000 earned in the nine months ended September 30, 2022 was earned from TubeSolar AG (“TubeSolar”), a related party.
Government contracts revenue. Revenue from government research and development contracts is generated under terms that are cost plus fee or firm fixed price. The Company generally recognizes this revenue over time using cost-based input methods, which recognizes revenue and gross profit as work is performed based on the relationship between actual costs incurred compared to the total estimated costs of the contract. In applying cost-based input methods of revenue recognition, the Company uses the actual costs incurred relative to the total estimated costs to determine our progress towards contract completion and to calculate the corresponding amount of revenue to recognize.
Cost based input methods of revenue recognition are considered a faithful depiction of the Company’s efforts to satisfy long-term government research and development contracts and therefore reflect the performance obligations under such contracts. Costs incurred that do not contribute to satisfying the Company’s performance obligations are excluded from the input methods of revenue recognition as the amounts are not reflective of transferring control under the contract. Costs incurred towards contract completion may include direct costs plus allowable indirect costs and an allocable portion of the fixed fee. If actual and estimated costs to complete a contract indicate a loss, provision is made currently for the loss anticipated on the contract.
No government contract revenue was recognized during the three and nine months ended September 30, 2023 and 2022.
Accounts Receivable.As of September 30, 2023 and December 31, 2022, the Company had an accounts receivable, net balance of $– and $1,769,respectively. As of September 30, 2023 and December 31, 2022, the Company had an allowance for doubtful accounts of $– and $26,000, respectively.
Deferred revenue for the nine months ended September 30, 2023 was as follows:
Balance as of January 1, 2023 | $ | 13,000 |
|
Additions |
| 29,350 |
|
Recognized as revenue |
| (42,350 | ) |
Balance as of September 30, 2023 | $ | - |
|
Earnings per Share: Earnings per share (“EPS”) are the amount of earnings attributable to each share of common stock. Basic EPS has been computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding during the period. Income available to common stockholders has been computed by deducting dividends accumulated for the period on cumulative preferred stock (whether or not earned) and deemed dividends due to down round financings from net income. For the nine months ended September 30, 2023, income available to common stockholders was adjusted for deemed dividends due to down round financings of $11,653,986 (Note 11). Diluted earnings per share has been computed by dividing income available to common stockholders adjusted on an if-converted basis for the period by the
7
weighted average number of common shares and potentially dilutive common share outstanding (which consist of warrants, options, restricted stock units and convertible securities using the if-converted or treasury stock method to the extent they are dilutive). Approximately 1,144 thousand and 381 shares of dilutive shares were excluded from the three months period ended September 30, 2023 and 2022, respectively, EPS calculation as their impact is antidilutive. Approximately 537 thousand and 58 shares of dilutive shares were excluded from the nine months period ended September 30, 2023 and 2022, respectively, EPS calculation as their impact is antidilutive.
Net loss attributable to common shareholders for the three and nine months ended September 30, 2023 was as follows:
|
| Three months ended |
|
| Nine months ended |
| ||||
|
| September 30, 2023 |
|
| September 30, 2023 |
| ||||
Net Loss |
| $ |
| (1,909,273 | ) |
| $ |
| (11,906,097 | ) |
Down round deemed dividend |
|
|
| - |
|
|
|
| (11,653,986 | ) |
Net Loss attributable to common shareholders |
|
|
| (1,909,273 | ) |
|
|
| (23,560,083 | ) |
Earnings Per Share (Basic and Diluted) |
|
|
| (4.04 | ) |
|
|
| (66.40 | ) |
Recently Adopted or to be Adopted Accounting Policies
On January 1, 2023, the Company adopted ASU 2020-06. The adoption resulted in the elimination of the beneficial conversion feature recognized on the Company’s convertible debt. The Company elected to apply the modified retrospective method to all open contracts as of January 1, 2023, and the cumulative effect of initially applying ASU 2020-06 was recognized as an adjustment to the Company’s retained earnings balance as of January 1, 2023. Comparative periods have not been restated and continue to be reported under the accounting standard in effect for those periods.
The cumulative effect of the changes made to the Company’s January 1, 2023, unaudited condensed balance sheet for the adoption of ASU 2020-06 is as follows:
|
| Balance at December 31, 2022 |
|
| Adjustments Due to Adoption |
|
| Balance at January 1, 2023 |
| ||||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
| |||
Non-current convertible notes, net |
| $ |
| 5,268,399 |
|
| $ |
| 3,686,243 |
|
| $ |
| 8,954,642 |
|
Shareholders' equity |
|
|
|
|
|
|
|
|
|
|
|
| |||
Additional paid in capital |
|
|
| 452,135,653 |
|
|
|
| (3,795,874 | ) |
|
|
| 448,339,779 |
|
Accumulated deficit |
|
|
| (447,537,493 | ) |
|
|
| 109,631 |
|
|
|
| (447,427,862 | ) |
The impact due to the change in accounting principle on net income and earnings per share for the three and nine months ended September 30, 2023 is as follows:
8
|
| Post ASU 2020-06 |
|
| Pre ASU 2020-06 |
|
| Difference |
| ||||||
Three months ended September 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
| |||
Net Loss |
| $ |
| (1,909,273 | ) |
| $ |
| (5,668,147 | ) |
| $ |
| 3,758,874 |
|
Net Loss attributable to common shareholders |
|
|
| (1,909,273 | ) |
|
|
| (5,668,147 | ) |
|
|
| 3,758,874 |
|
Earnings Per Share (Basic and Diluted) |
|
|
| (4.04 | ) |
|
|
| (11.98 | ) |
|
|
| (7.94 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Nine months ended September 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
| |||
Net Loss |
| $ |
| (11,906,097 | ) |
| $ |
| (20,553,708 | ) |
| $ |
| 8,647,611 |
|
Net Loss attributable to common shareholders |
|
|
| (23,560,083 | ) |
|
|
| (32,207,694 | ) |
|
|
| 8,647,611 |
|
Earnings Per Share (Basic and Diluted) |
|
|
| (66.40 | ) |
|
|
| (90.77 | ) |
|
|
| (24.37 | ) |
Other new pronouncements issued but not effective as of September 30, 2023 are not expected to have a material impact on the Company’s unaudited condensed financial statements.
NOTE 4. LIQUIDITY, CONTINUED OPERATIONS, AND GOING CONCERN
During the year ended December 31, 2016,2022, the Company entered into multiple financing agreements to fund operations. Further discussion of these transactions can be found in Notes 8 through 20 of the financial statements presented as of,12 and for the nine months ended, September 30, 2017, and in Notes 9 through 20 of the financial statements included15 in the Company's Annual Report on Form 10-K for the year ended December 31, 2016.
In March 2023, the Company has continued PVredeployed its Thornton manufacturing facility to focus on industrial commercialization of the Company's patent-pending Perovskite solar technologies. In April 2023, the Company purchased manufacturing assets in Zurich, Switzerland with plans to commence manufacturing using this equipment; however, in June 2023, Management exercised its put option to sell the this equipment (see Note 5) and is planning to restart production at its manufacturingThornton facility. The CompanyManagement does not expect that sales revenue and cash flows will be sufficient to support operations and cash requirements until it has fully implemented its product strategy.the Company is able to achieve large scale production capacities. During the nine months ended September 30, 20172023 the Company used $10.7 million$7,329,398 in cash for operations. The Company's primary significant long term cash obligation consists of a note payable of $5.5 million to a financial institution secured by a mortgage on its headquarters and manufacturing building in Thornton, Colorado. Total payments of approximately $0.2 million, including principal and interest, will come due in the remainder of 2017.
Additionally, projected product revenues aremay not anticipated to result in a positive cash flow position for the year 2017 overall and,next twelve months. The Company had a working capital deficit of $8,726,319 as of September 30, 2017, the Company has negative working capital. As such,2023. Management does not believe cash liquidity is sufficient for the year ending December 31, 2017next twelve months and will require additional financing.
The Company continues to accelerate saleslook for ways to produce its PV films at industrial scale and marketing efforts related to its consumer and military solar products and specialty PV application strategies through expansionsecure long-term contracts for the sale of its sales and distribution channels.such output. The Company has beguncontinues activities related to securing additional financing through strategic or financial investors, but there is no assurance the Company will be able to raise additional capital on acceptable terms or at all. If the Company's revenues do not increase rapidly, and/or additional financing is not obtained, the Company will be required to significantly curtail operations to reduce costs and/or sell assets. Such actions would likely have an adverse impact on the Company's future operations.
As a result of the Company’s recurring losses from operations and the need for additional financing to fund its operating and capital requirements, there is uncertainty regarding the Company’s ability to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt as to the Company’s ability to continue as a going concern.
Management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. These unaudited condensed financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.
9
NOTE 5. ASSET ACQUISITION
On April 17, 2023, the Company entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Flisom (the “Seller”), pursuant to which, among other things, the Company purchased certain assets relating to thin-film photovoltaic manufacturing and production from the Seller (collectively, the “Assets”), including (i) certain manufacturing equipment located at Seller’s Niederhasli, Switzerland facility (the “Manufacturing Facility”) and (ii) related inventory and raw materials at the Manufacturing Facility (collectively, the “Transaction”). In connection with the Transaction, the Company also acquired, by operation of Swiss law, the employment contracts of certain employees of Seller in Switzerland who are functionally predominantly working with the Assets, subject to such employees being offered the right to remain employed by Seller after the closing of the Transaction. The total consideration paid by the Company to Seller in connection with the Transaction was an aggregate amount in cash equal to $2,800,000.
At the Closing, the Company and Seller also entered into (i) a Transition Services Agreement requiring the Seller to provide transition support for the Company’s operation of the Assets, with fees to be paid by the Company for performing defined support services, (ii) a Sublease Agreement allowing the Company’s to use the Manufacturing Facility where the Assets are located, and (iii) a Technology License Agreement, pursuant to which Seller granted the Company a revocable, non-exclusive license to certain intellectual property rights of the Seller used in the operation of the Assets (the “Licensed IP”), subject to certain encumbrances on the Licensed IP in favor of Seller’s lender. The Company will also receive proceeds from fulfilling a supply agreement obligation for one of the Seller’s customers.
The total purchase price, including transaction costs of $1,283,926, was allocated as follows:
| Asset Price Allocation |
| |
Inventory |
|
| |
Raw Material | $ | 130,030 |
|
Finished Goods |
| 62,427 |
|
Other Assets |
| 98,746 |
|
Fixed Assets |
|
| |
Manufacturing machinery and equipment |
| 3,682,621 |
|
Furniture, fixtures, computer hardware and |
| 110,102 |
|
In addition to the Asset Purchase Agreement, on April 20, 2023, the Company entered into a letter agreement (the “Letter Agreement”) with FL1 Holding GmbH, a German company (“FL1”) that is affiliated with BD 1 Investment Holding, LLC (“BD1”), an affiliate of the Company, BD1 and BD Vermögensverwaltung GmbH (“BD”), the parent entity of FL1 (collectively, the “Affiliates”), in connection with the prospective acquisition by FL1 of substantially all shares in Seller following the Closing, subject to the satisfaction of certain terms and conditions. The Letter Agreement, among other things, granted the Company the option, but not the obligation, (i) to purchase certain intellectual property rights of Seller relating to thin-film photovoltaic manufacture and production for $2,000,000 following the release of certain liens on such intellectual property rights in favor of Seller’s lender, and (ii) for a period of 12 months following the Closing, to resell the Assets to the Affiliates for an aggregate amount equal to $5,000,000, with such transaction to close within 90 days following the exercise of the Company’s resale right. On June 16, 2023, the Company exercised its option to resell the Assets to the Affiliates. The Company has not received payment on this option and Management continues to discuss with the Affiliates the Company's options and rights to resolve this matter.
In September, 2023, Flisom filed for bankruptcy in Switzerland. These proceeding are in the initial phase in which the bankruptcy office will need to determine if the proceedings can be carried out with a creditors' meeting, without a creditors' meeting, or will be discontinued due to lack of Flisom assets to pay for these proceedings. The Company's purchased Assets are currently located in the Manufacturing Facility.
Management has retained legal counsel who have been in discussions with the bankruptcy office and the Manufacturing Facility landlord. While it is too early to predict the outcome of this matter or whether an adverse result would have a material adverse impact on our operations or financial position, Management continues to assess its options.
10
As of September 30, 2023, the Company's the book value of the Assets was approximately $4,070 thousand and the Company had a payable to Flisom of approximately $750 thousand.
NOTE 6. RELATED PARTY TRANSACTIONS
On September 15, 2021, the Company entered into a Long-Term Supply and Joint Development Agreement (“JDA”) with TubeSolar. Under the terms of the JDA, the Company will produce, and TubeSolar will purchase, thin-film photovoltaic (“PV”) foils (“PV Foils”) for use in TubeSolar’s solar modules for agricultural photovoltaic (“APV”) applications that require solar foils for its production. Additionally, the Company will receive (i) up to $4 million of non-recurring engineering (“NRE”) fees, (ii) up to $13.5 million of payments upon achievement of certain agreed upon production and cost structure milestones and (iii) product revenues from sales of PV Foils to TubeSolar. The JDA has no fixed term, and may only be terminated by either party for breach. No revenue was recognized under the JDA during the three and nine months ended September 30, 2023. $512,000 of NRE revenue were recognized under the JDA during the nine months ended September 30, 2022. In June, 2023, TubeSolar filed an application for the opening of insolvency proceedings with the competent insolvency court due to insolvency.
The Company and TubeSolar have also jointly established Ascent Solar Technologies Germany GmbH (“Ascent Germany”), in which TubeSolar holds 30% of the entity. Ascent Germany was established to operate a PV manufacturing facility in Germany that will produce and deliver PV Foils exclusively to TubeSolar. The parties expect to jointly develop next generation tooling for use in manufacturing PV Foils at the JV facility. The Company accounts for this investment as an equity method investment as it does not have control of this entity, but does have significant influence over the activities that most significantly impact the entity’s operations and financial performance. The Company contributed $- and $83,559 to Ascent Germany during the nine months ended September 30, 2023 and 2022, respectively. There has been no material activity in Ascent Germany since its establishment and the Company currently cannot quantify its maximum exposure in this entity.
NOTE 7. PROPERTY, PLANT AND EQUIPMENT
The following table summarizes property, plant and equipment as of
September 30,
|
| As of |
|
| As of |
| ||
|
| 2023 |
|
| 2022 |
| ||
Furniture, fixtures, computer hardware and |
| $ | 578,690 |
|
| $ | 482,235 |
|
Manufacturing machinery and equipment |
|
| 23,552,252 |
|
|
| 21,739,504 |
|
Leasehold improvements |
|
| 15,994 |
|
|
| 87,957 |
|
Manufacturing machinery and equipment, |
|
| 35,359 |
|
|
| 280,473 |
|
Depreciable property, plant and equipment |
|
| 24,182,295 |
|
|
| 22,590,169 |
|
Less: Accumulated depreciation and amortization |
|
| (20,125,328 | ) |
|
| (22,038,508 | ) |
Net property, plant and equipment |
| $ | 4,056,967 |
|
| $ | 551,661 |
|
As of September 30, | As of December 31, | |||||||
2017 | 2016 | |||||||
Building | $ | 5,828,960 | $ | 5,828,960 | ||||
Furniture, fixtures, computer hardware and computer software | 489,421 | 489,421 | ||||||
Manufacturing machinery and equipment | 30,306,793 | 30,300,391 | ||||||
Net depreciable property, plant and equipment | 36,625,174 | 36,618,772 | ||||||
Manufacturing machinery and equipment in progress | 20,688 | 20,688 | ||||||
Property, plant and equipment | 36,645,862 | 36,639,460 | ||||||
Less: Accumulated depreciation and amortization | (31,873,054 | ) | (30,983,448 | ) | ||||
Net property, plant and equipment | $ | 4,772,808 | $ | 5,656,012 |
Depreciation expense for the three and nine months ended
NOTE 8. OPERATING LEASE
The Company’s lease is primarily comprised of approximately 100,000 rentable square feet for its manufacturing and operations. This lease is classified and accounted for as an operating lease. The building lease term is for 88 months commencing on September 21, 2020 at a rent of $50,000 per month including taxes, insurance and common area maintenance until December 31, 2020. Beginning January 1, 2021, the rent adjusted to $80,000 per month on a triple net basis and shall increase at an annual rate of 3% per annum until December 31, 2027.
Effective September 1, 2023, the lease was amended to reduce the rentable square feet from 100,000 to 73,319 and the rent and tenant share of expenses were decreased in proportion to the reduction in rentable square feet. The Company recorded this as a lease modification in accordance with ASC 842, Leases, and recorded a reduction to the right of use asset and lease
11
liability of $1,292,316 and $1,376,994, respectively. The Company recognized a gain on the lease modification of $84,678, which was recorded as other income in the unaudited Condensed Statement of Operations.
As of the following at
|
| As of |
|
| As of |
| ||
|
| 2023 |
|
| 2022 |
| ||
Operating lease right-of-use assets, net |
| $ | 2,476,958 |
|
| $ | 4,324,514 |
|
Current portion of operating lease liability |
|
| 471,497 |
|
|
| 733,572 |
|
Non-current portion of operating lease liability |
|
| 2,171,440 |
|
|
| 3,827,878 |
|
As of September 30, | As of December 31, | |||||||
2017 | 2016 | |||||||
Raw materials | $ | 736,721 | $ | 832,806 | ||||
Work in process | 8,193 | 635,130 | ||||||
Finished goods | 322,142 | 1,101,880 | ||||||
Total | $ | 1,067,056 | $ | 2,569,816 |
During the three months ended September 30, 2023 and 2022, the Company analyzes its inventory for impairment, both categoricallyrecorded operating lease expense included in selling, general and as a group, whenever events or changes in circumstances indicate that the carrying amountadministrative expenses of the inventory may not be recoverable.$236,925 and $261,069, respectively. During the nine months ended September 30, 2017,2023 and 2022, the Company impaired $363,758recorded operating lease expense included in selling, general and administrative expenses of inventory.
Future maturities of the operating lease liability are shownas follows:
Remainder of 2023 |
| $ | 186,682 |
|
2024 |
|
| 769,130 |
|
2025 |
|
| 792,203 |
|
2026 |
|
| 815,969 |
|
2027 |
|
| 840,449 |
|
Total lease payments |
|
| 3,404,433 |
|
Less amounts representing interest |
|
| (761,496 | ) |
Present value of lease liability |
| $ | 2,642,937 |
|
The remaining weighted average lease term and discount rate of the operating leases is 51 months and 12.0%, respectively.
NOTE 9. INVENTORIES
Inventories, net of allowancereserves, consisted of $506,961 and $736,663 for the nine months endedfollowing at September 30, 2017 and the year ended December 31, 2016, respectively.
|
| As of |
|
| As of |
| ||
|
| 2023 |
|
| 2022 |
| ||
Raw materials |
| $ | 577,536 |
|
| $ | 577,799 |
|
Work in process |
|
| 10,267 |
|
|
| 37,351 |
|
Finished goods |
|
| 48,216 |
|
|
| 133 |
|
Total |
| $ | 636,019 |
|
| $ | 615,283 |
|
NOTE 10. OTHER PAYABLE
On November 1, 2016, the Company and the CFHA agreed to modify the original agreement described above with the addition of a forbearance period. Per the modification agreement, no payments of principal and interest shall be due under the note during the forbearance period commencing on November 1, 2016 and continuing through April 1, 2017. The amount of interest that should have been paid by the Company during the forbearance period in the total amount of $180,043 shall be added to the outstanding principal balance of the note. As a result, on May 1, 2017, the principal balance of the note was $5,704,932. Commencing on May 1, 2017, the monthly payments of principal and interest due under the note resumed at $57,801, and the Company shall continue to make such monthly payments over the remaining term of the note ending on February 1, 2028.
2017 | $ | 82,375 | |
2018 | 343,395 | ||
2019 | 366,757 | ||
2020 | 391,709 | ||
2021 | 418,358 | ||
Thereafter | 3,941,599 | ||
$ | 5,544,193 |
12
NOTE 11. CONVERTIBLE NOTES
The note bears interest of 5% per annum and matures on February 28, 2018; all outstanding principal and accrued interest is due and payable upon maturity. As of September 30, 2017, the Company had not made any payments on these notes and the accrued interest was $3,151.
| Principal |
| Notes converted |
| Principal |
| Less: |
| Net Principal |
| |||||
Sabby Volatility Warrant Master Fund, LTD | $ | 7,392,899 |
| $ | (7,392,899 | ) | $ | — |
| $ | — |
| $ | — |
|
L1 Capital Global Opportunities Master Fund, Ltd |
| 7,500,000 |
|
| (7,093,333 | ) |
| 406,667 |
|
| (87,126 | ) |
| 319,541 |
|
| $ | 14,892,899 |
| $ | (14,486,232 | ) | $ | 406,667 |
| $ | (87,126 | ) | $ | 319,541 |
|
Sabby / L1 Convertible Notes
On December 2016 and April 2017, the Company initiated eleven non-convertible, unsecured promissory notes with a private investor with varying principal amounts aggregating to $3,400,000. The promissory notes bear interest of 12% per annum and mature six months from the respective dates of issuance, ranging from June 2, 2017 to October 21, 2017. Unless paid in advance, the principal and interest of these promissory notes are payable upon maturity. The notes are not convertible into equity shares of the Company and are unsecured.
On March 29, 2023, the Company and each of the Investors entered into a Waiver and Amendment Agreement (the “Amendment”) relating to the Securities Purchase Contract and the Advance Notes to waive any event of default arising under Section 2.1 of the Advance Notes relating to the Company’s receipt of notice from the Listing Qualifications Department of Nasdaq indicating that the Company is not in compliance with the $1.00 Minimum Bid Price Requirement set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on The Nasdaq Capital Market (the “Specified Default”).
Pursuant to the Amendment, the Company and each of the Investors agreed to waive the Specified Default and further agreed to the amend the Advance Notes to provide that (i) the new “Floor Price” for all purposes of the Advance Notes is $0.20 per share of the Company’s common stock, (ii) until the Company regains compliance with the $1.00 Minimum Bid Price Requirement, “Conversion Price” under the Advance Notes will mean the “Alternative Conversion Price” (as defined in the Advance Notes) and (iii) the Company will make certain prepayments of the Advance Notes held by the Investors on the following dates and in the following aggregate cash amounts, at a price equal to 100% of the principal amount of the Advance Notes to be repaid plus accrued and unpaid interest thereon (if any). The Company's failure to comply with the terms of the Amendment would constitute an Event of Default under the Advance Notes.
On April 12, 2023, the Company and each of the Investors entered in a further amendment to the Amendment (the “Revised Amendment”), to provide for a consistent prepayment schedule for the Advance Notes held by each of the Investors. After giving effect to the Revised Amendment, the Advance Notes will be prepaid by the Company in cash on the following dates and in the following aggregate amounts, at a price equal to 100% of the principal amount of the Advance Notes to be prepaid plus accrued and unpaid interest thereon (if any). The Company’s failure to comply with the terms of the Revised Amendment would constitute an “Event of Default” under the Advance Notes.
Prepayment Date | Aggregate |
| |
April 3, 2023 | $ | 333,333 |
|
April 13, 2023 |
| 333,333 |
|
May 18, 2023 |
| 666,667 |
|
June 19, 2023 |
| 666,667 |
|
| $ | 2,000,000 |
|
On May 22, 2023, the Investors and the Company agreed to defer for 90 days each of the two prepayments of $666,667 that were scheduled for May 18, 2023 and June 19, 2023. Accordingly, (i) the May 18, 2023 payment is deferred until August 16, 2023, and (ii) the June 19, 2023 payment is delayed until September 17, 2023.
13
On May 25, 2023, the Company and each of the Investors entered into a Waiver and Amendment Agreement (the “Second Amendment”) relating to the Securities Purchase Contract and the Advance Notes. Pursuant to the Second Amendment, the Company and each of the Investors agreed to amend the Advance Notes to provide that if the Company receives a Notice of Conversion at a time that the Conversion Price (or, as applicable, the Alternative Conversion Price) then in effect Price, without regard to the Floor Price (the “Applicable Conversion Price”), is less than the Floor Price then in effect, the Company shall issue a number of shares equal to the Conversion Amount divided by such Floor Price and, at its election (x) pay the economic difference between the Applicable Conversion Price and such Floor Price (the “Outstanding Conversion Amount”) in cash at such time or (y) pay the Outstanding Conversion Amount following the consummation of a reverse stock split by the Company (1) in cash or (2) by issuing to the Holder a number of shares of Common Stock with an investoraggregate value equal to sellthe Outstanding Conversion Amount, with the value per share of Common Stock for purposes of such calculation equal to (i) if such shares are issued on or prior to August 23, 2023, the daily VWAP of the Common Stock on the Trading Day following the date of the consummation of such reverse stock split or (ii) if such shares are issued after August 23, 2023, 90% of the daily VWAP of the Common Stock on the Trading Day following the date of the consummation of such reverse stock split. As of September 30, 2023, the Company had $6,470,540 in Outstanding Conversion Amounts recorded as Conversions Payable on the unaudited Condensed Balance Sheets.
The Securities Purchase Contract also included certain warrants to purchase up to 12,567 shares of common stock (the "Warrants"). The Warrants were issued with an exercise price equal to $786 per share, subject to certain adjustments in certain events, including the future issuance by the Company of securities with a purchase or conversion, exercise or exchange price that is less than the exercise price of the Warrants then in effect at any time.
On April 14, 2023 the Company entered a securities purchase agreement (“SPA”) with Lucro Investments VCC-ESG Opportunities Fund (“Lucro”) for an approximate $9 million private placement (the “Private Placement”) of an aggregate of 750,00037,500 shares of the Company’s Common Stock. The per share purchase price for the Shares is $240 per share. The terms of the SPA with Lucro triggered certain adjustments to the Advance Notes and the Warrants in accordance with the existing terms of the outstanding Advance Notes and the outstanding Warrants. Following these adjustments:
On June 29, 2023 the Company entered a securities purchase agreement (“Series 1B SPA”) with accredited investors (the "Accredited Investors") for the private placement of $900,000 for 900 shares of the Company’s newly designated Series 1B Convertible Preferred Stock (“Series 1B Preferred Stock”) (Note 13). Shares of the Series 1B Preferred Stock are convertible at the option of the holder into common stock at an initial conversion price of equal to $28.00 per share.
The terms of the Series 1B SPA triggered certain further adjustments to the Advance Notes and the Warrants in accordance with the existing terms of the outstanding Advance Notes and the outstanding Warrants. Following these further adjustments in June 2023:
Pursuant to ASC 260, Earnings per Share, the Company recorded a deemed dividend for the down round adjustments of $11,653,986 which reduced income available to common shareholders in the Company's earnings per share calculations.
Under the existing terms of the Advance Notes the conversion price may in no event be less than a floor price (the “Floor Price”) of $40 currently. The new adjusted fixed conversion price of the Advance Notes ($1.765) is less than the Floor Price. Accordingly, upon conversion of the Advance Notes, the Company shall issue a number of shares equal to the Conversion
14
Amount divided by such Floor Price and, at its election (x) pay the economic difference between the Applicable Conversion Price and such Floor Price (the “Outstanding Conversion Amount”) in cash at such time or (y) pay the Outstanding Conversion Amount following the consummation of a reverse stock split by the Company (1) in cash or (2) by issuing to the Holder a number of shares of Common Stock with an aggregate value equal to the Outstanding Conversion Amount, with the value per share of Common Stock for purposes of such calculation equal to (i) if such shares are issued on or prior to August 23, 2023, the daily VWAP of the Common Stock on the Trading Day following the date of the consummation of such reverse stock split or (ii) if such shares are issued after August 23, 2023, 90% of the daily VWAP of the Common Stock on the Trading Day following the date of the consummation of such reverse stock split.
During the nine months ended September 30, 2023, the Company settled $14.5 million of principal as follows:
| Debt Settlement |
| |
Equity issued for convertible debt | $ | 2,912,759 |
|
Conversions payable |
| 6,470,540 |
|
Cash repayments |
| 1,025,423 |
|
Accelerated discount recognized in APIC |
| 4,077,510 |
|
Principal settled during the nine months ended September 30, 2023 | $ | 14,486,232 |
|
During the three and nine months ended September 30, 2023, the Company had interest expense of $271,162 and $2,070,669, respectively, of which, $231,536 and $1,773,633 for the three and nine months ended September 30, 2023, respectively, was due to accretion of discount on the Advanced Notes. Interest payable was $85,731 as of September 30, 2023.
NOTE 12. SERIES A PREFERRED STOCK
As of January 1, 2023, there were 48,100 shares of Series A Preferred Stock at a price of $8.00 per share, resulting in gross proceeds of $6,000,000. This purchase agreement included warrants to purchase up to 13,125 shares of common stock of the Company. The transfer of cash and securities took place incrementally, the first closing occurring on June 17, 2013 with the transfer of 125,000 shares of Series A Preferred Stock and a warrant to purchase 2,187 shares of common stock for $1,000,000. The final closings took place in August 2013, with the transfer of 625,000 shares of Series A Preferred Stock and a warrant to purchase 10,938 shares of common stock for $5,000,000.
The Series A Preferred Stock may be converted into shares of common stock at the option of the Company if the closing price of the common stock exceeds $232, as$232 million, adjusted for 20reverse stock splits, for twenty consecutive trading days, or by the holder at any time. The Company has the right to redeem the Series A Preferred Stock at a price of $8.00$8.00 per share, plus any accrued and unpaid dividends, plus the make-whole amount (if applicable). At September 30, 2017,2023, the preferred shares were not eligible for conversion to common shares at the option of the Company. The holder of the preferred shares may convert to common shares at any time, at no cost, at a ratio of 1time. After making adjustment for the Company’s prior reverse stock splits, all 48,100 outstanding Series A preferred shareshares are convertible into 1less than one common share (subject to standard ratable anti-dilution adjustments).share. Upon any conversion (whether at the option of the Company or the holder), the holder is entitled to receive any accrued but unpaid dividends and also any make-whole amount (if applicable). See Note 19. Make-Whole Dividend Liability.
Except as otherwise required by law (or with respect to approval of certain actions), the Series A Preferred Stock shall have no voting rights. Upon any liquidation, dissolution or winding up of the Company, after payment or provision for payment of debts and other liabilities of the Company, the holders of Series A Preferred Stock shall be entitled to receive, pari passu with any distribution to the holders of common stock of the Company, an amount equal to $8.00 per share of Series A Preferred Stock plus any accrued and unpaid dividends.
As of September 30, 2017,2023, there were 60,75648,100 shares of Series A Preferred Stock outstanding.outstanding and accrued and unpaid dividends of $501,977.
NOTE 11.13. SERIES E1B PREFERRED STOCK AND THE COMMITTED EQUITY LINE
On November 4, 2015,June 29, 2023, the Company entered into a securities purchase agreement with a private investor to issue 2,800 shares of Series E Preferred Stock in exchange for $2,800,000.
Conversion Period | Preferred Series E Shares Converted | Value of Series E Preferred Shares (inclusive of accrued dividends) | Common Shares Issued | ||||
Q4 2015 | 478 | $ | 481,500 | 250,000 | |||
Q1 2016 | 1,220 | 1,239,436 | 1,132,000 | ||||
Q2 2016 | 365 | 381,414 | 7,979,568 | ||||
Q3 2016 | 523 | 548,896 | 21,973,747 | ||||
Q4 2016 | 94 | 101,018 | 13,089,675 | ||||
Q1 2017 | 15 | 16,248 | 8,289,962 | ||||
Q2 2017 | 35 | 38,886 | 134,927,207 | ||||
Q3 2017 | 70 | 76,814 | 129,314,677 | ||||
2,800 | $ | 2,884,212 | 316,956,836 |
Conversion Period | Preferred Series F Shares Converted | Value of Series F Preferred Shares (inclusive of accrued dividends) | Common Shares Issued | ||
Q1 2016 | 2,168 | $ | 2,188,298 | 2,183,992 | |
Q2 2016 | 3,234 | 3,300,931 | 6,649,741 | ||
Q3 2016 | 1,262 | 1,315,743 | 81,917,364 | ||
Q4 2016 | 176 | 185,118 | 27,276,005 | ||
Q3 2017 | 20 | 20,000 | 18,181,818 | ||
6,860 | $ | 7,010,090 | 136,208,920 |
Conversion Period | Preferred Series G Shares Converted | Value of Series G Preferred Shares (inclusive of accrued dividends) | Common Shares Issued | |||
Q4 2016 | 892 | 929,895 | 245,726,283 | |||
Q1 2017 | 372 | 397,970 | 327,718,386 | |||
Q2 2017 | 526 | 575,096 | 1,337,776,821 | |||
1,790 | $ | 1,902,961 | 1,911,221,490 |
Conversion Period | July 2016 Convertible Notes Converted (exclusive of interest) | Common Shares Issued | |||
Q4 2016 | $ | 152,460 | 64,000,000 | ||
Q1 2017 | 1,017,732 | 959,704,543 | |||
Q2 2017 | 682,235 | 1,865,043,998 | |||
$ | 1,852,427 | 2,888,748,541 |
15
Conversion Period | Exchange Convertible Notes Converted | Common Shares Issued | ||
Q3 2016 | $ | 15,000 | 1,470,588 | |
Q4 2016 | 91,563 | 13,346,274 | ||
Q1 2017 | 70,000 | 50,503,662 | ||
Q2 2017 | 37,535 | 86,987,428 | ||
Q3 2017 | 118,536 | 282,228,524 | ||
$ | 332,634 | 434,536,476 |
Closing Period | Preferred Series K Shares Purchased | Closing Amount | |||
Q1 2017 | 150 | $ | 150,000 | ||
Q2 2017 | 4,100 | 4,100,000 | |||
Q3 2017 | 4,760 | $ | 4,760,000 | ||
9,010 | $ | 9,010,000 |
The Series K1B Preferred Stock ranks senior to the Company’s common stock inwith respect to dividends and rights upon liquidation. TheHolders of the Series K1B Preferred Stock willdo not have voting rights and the holders of the Series K Preferred Stock willare not be entitled to any fixed rate of dividends.
There is no scheduled or mandatory redemption for the Series 1B Preferred Stock and there is no redemption for the Series 1B Preferred Stock exercisable (i) at the option of the holder into common stockInvestor, or (ii) at a fixed conversion price equal to $0.004. At no time may the Series K Preferred Stock be converted if the number of shares of common stock to be received by Investor pursuant to such conversion, when aggregated with all other shares of common stock then beneficially (or deemed beneficially) owned by Investor, would result in Investor beneficially owning more than 19.99% of all common stock then outstanding. The following table summarizes the conversion activity of Series K Preferred Stock:
Conversion Period | Preferred Series K Shares Converted | Value of Series K Preferred Shares | Common Shares Issued | ||||
Q2 2017 | 3,200 | $ | 3,200,000 | 800,000,000 | |||
Q3 2017 | 3,000 | $ | 3,000,000 | 750,000,000 | |||
6,200 | $ | 6,200,000 | 1,550,000,000 |
Upon our liquidation, dissolution or winding up, holders of Series K1B Preferred Stock will be entitled to be paid out of our assets, prior to the holders of our common stock, an amount equal to $1,000$1,000 per share plus any accrued but unpaid dividends (if any) thereon.
Shares of the Series K1B Preferred Stock was classified as a liabilityare convertible at the option of the holder into common stock at an initial conversion price of equal to $28.00 per share. The conversion price for the Series 1B Preferred Stock is subject to adjustment on the Consolidated Balance Sheets. Pursuant to a number of factors outlined in ASC Topic 815, the conversion option in the Series K Preferred Stock was deemed to not require bifurcation or separate accounting treatment.
On the Reset Date, the conversion price shall be equal to the lower of (i) 85%$0.14 and (ii) 90% of the averagelowest VWAP for the shares overCompany’s common stock out of the prior five10 trading days or (ii)commencing 5 trading days immediately prior to the closing bidReset Date, provided that the conversion price for the shares on the prior trading day.
Holders of the Investor intoSeries 1B Preferred Stock (together with its affiliates) may not convert any portion of such Investor’s Series 1B Preferred Stock to the extent that the holder would beneficially own more than 4.99% of the Company’s outstanding shares of common stock after conversion, except that upon at least 61 days’ prior notice from the holders to the Company, the holder may increase the maximum amount of its beneficial ownership of outstanding shares of the Company’s Common Stock after converting the holder’s Series 1B Preferred Stock up to 9.99% of the number of shares of Common Stock at a fixed conversion price of $0.004 per share.
NOTE 14. STOCKHOLDERS’ EQUITY (DEFICIT)
Common Stock.
At September 30, 2017, the Company conducted a fair value assessment of the embedded derivative associated with the October 2016 Convertible Notes. As a result of the fair value assessment, the Company recorded a $225,319 gain as "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017, to properly reflect the fair value of the embedded derivative of $242,776 as of September 30, 2017.
During the nine months ended September 30, 2023, $14.5 million of convertible debt principal was converted into 288,451 shares of common stock and 1,425 shares of common stock was issued for vendor services.
Preferred Stock
At September 30, 2017,2023, the Company had 25,000,00025 million shares of preferred stock, $0.0001$0.0001 par value, authorized for issuance. Preferred stock may be issued in classes or series. Designations, powers, preferences, rights, qualifications, limitations and restrictions are determined by the Company’s Board of Directors.
16
The following table summarizes the designations, shares authorized, and shares outstanding for the Company'sCompany’s Preferred Stock:
Preferred Stock Series Designation |
| Shares |
|
| Shares |
| ||
Series A |
|
| 750,000 |
|
|
| 48,100 |
|
Series 1A |
|
| 5,000 |
|
|
| — |
|
Series B-1 |
|
| 2,000 |
|
|
| — |
|
Series B-2 |
|
| 1,000 |
|
|
| — |
|
Series 1B |
|
| 900 |
|
|
| 900 |
|
Series C |
|
| 1,000 |
|
|
| — |
|
Series D |
|
| 3,000 |
|
|
| — |
|
Series D-1 |
|
| 2,500 |
|
|
| — |
|
Series E |
|
| 2,800 |
|
|
| — |
|
Series F |
|
| 7,000 |
|
|
| — |
|
Series G |
|
| 2,000 |
|
|
| — |
|
Series H |
|
| 2,500 |
|
|
| — |
|
Series I |
|
| 1,000 |
|
|
| — |
|
Series J |
|
| 1,350 |
|
|
| — |
|
Series J-1 |
|
| 1,000 |
|
|
| — |
|
Series K |
|
| 20,000 |
|
|
| — |
|
Warrants
As of September 30, 2023, there are 396,576 outstanding warrants with exercise prices between $25.36 and $1,060 per share.
Series A Preferred Stock
Series F1B Preferred Stock
Series 1A, B-1, B-2, C, D, D-1, E, F, G, H, I, J, Preferred Stock
There were no transactions involving the Series 1A, B-1, B-2, C, D, D-1, E, F, G, H, I, J, J-1, or K Preferred Stock.
For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Share-based compensation cost included in: | ||||||||||||||||
Research and development | $ | 659 | $ | 29,502 | $ | 17,557 | $ | 154,786 | ||||||||
Selling, general and administrative | 12,147 | 121,294 | 91,160 | 553,990 | ||||||||||||
Total share-based compensation cost | $ | 12,806 | $ | 150,796 | $ | 108,717 | $ | 708,776 |
For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Type of Award: | ||||||||||||||||
Stock Options | $ | 12,806 | $ | 58,271 | $ | 82,388 | $ | 295,229 | ||||||||
Restricted Stock Units and Awards | — | 92,525 | 26,329 | 413,547 | ||||||||||||
Total share-based compensation cost | $ | 12,806 | $ | 150,796 | $ | 108,717 | $ | 708,776 |
NOTE 15. SHARE-BASED COMPENSATION
In 2022, the Company granted restricted stock units to its Chief Executive Officer and there were noChief Financial Officer. On April 26, 2023, the Company terminated its employment contract with the Company's then Chief Executive Officer resulting in the forfeiture of 11,389 restricted stock options granted during the nine months ended units. The remaining non-vested shares of 2,100 units as of September 30, 2017. Fair value was calculated using the Black-Scholes Model with the following assumptions:
17
|
| Shares |
|
| Weighted Average Grant Date Fair Value |
| ||
Non-vested at January 1, 2023 |
|
| 15,760 |
|
|
| 989.08 |
|
Vested |
|
| 2,271 |
|
|
| 926.66 |
|
Forfeited |
|
| 11,389 |
|
|
| 1,074.00 |
|
Non-vested at September 30, 2023 |
|
| 2,100 |
|
|
| 596.00 |
|
NOTE 16. COMMITMENTS AND CONTINGENCIES
On April 26, 2023, the board of directors of the Company terminated Jeffrey Max as the Company’s President and Chief Executive Officer. Mr. Max claims that his termination was no unrecognized share-based compensation expense from unvestednot for cause as defined in his employment agreement which could enable him to certain benefits, including severance and vesting of restricted stock no shares were expected to vestunits. Management believes Mr. Max was terminated for cause and any such claims, if asserted, would be without substantial merit. Although the outcome of any legal proceedings is uncertain, the Company will vigorously defend any future claims made by Mr. Max.
On August 15, 2023, H.C. Wainwright & Co., LLC (“Wainwright”) filed an action against the Company in the future, and, 518,388 shares remained available for future grants under the Restricted Stock Plan.
The Company is subject to various legal proceedings, both asserted and unasserted, that arise in the ordinary course of business. The Company cannot predict the ultimate outcome of such legal proceedings or in certain instances provide reasonable ranges of potential losses. However, as of the date of this report, the Company believes that none of these claims will have a material adverse effect on its consolidated financial position or results of operations. In the event of unexpected subsequent developments and given the inherent unpredictability of these legal proceedings, there can be no assurance that the Company’s assessment of any claim will reflect the ultimate outcome, and an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Company’s consolidated financial position or results of operations in particular quarterly or annual periods.
NOTE 17. SUBSEQUENT EVENTS
On October 21, 2011,September 28, 2023, the Company was notified that a complaint claiming $3.0 million for an investment banking fee (the “Lawsuit”) was filed by Jefferies & Company, Inc. (“Jefferies”) against the Company in New York State Supreme Court in the County of New York. In December 2010, Ascent and Jefferies entered into an engagementa placement agency agreement (the “Fee“Placement Agent Agreement”) with Dawson James Securities Inc. (“Dawson James”) pursuant to which Jefferies was hired to actthe Company engaged Dawson James as the Company's financial advisorplacement agent for a registered public offering by the Company (the “Offering”), of an aggregate of 3,572,635 units (“Units”) at a price of $2.88 per Unit, for gross proceeds of approximately $10.3 million, before deducting offering expenses.
Each Unit is comprised of (i) one share of common stock or, in relationlieu of common stock, one prefunded warrant to certain potential transactions. In addition, Jefferies claimed an award for attorney's feespurchase a share of common stock, and prejudgment interest in(ii) one common warrant to purchase a share of common stock. The prefunded warrants are immediately exercisable at a price of $0.0001 per share of common stock and only expire when such prefunded warrants are fully exercised. The common warrants are immediately exercisable at a price of $2.88 per share of common stock and will expire five years from the approximate amountdate of $1.2 million.
The Company agreed to pay JefferiesDawson James a totalplacement agent fee in cash equal to 8.00% of $2.0 million in equal installments over 40 months.the gross proceeds from the sale of the Units. The Company paid $339,481 duringalso agreed to reimburse Dawson James for all reasonable travel and other out-of-pocket expenses, including the nine months endedreasonable fees of legal counsel, not to exceed $155,000.
The Offering closed on October 2, 2023 and, in the Offering, the Company issued (i) 389,024 common shares, (ii) 3,183,611 prefunded warrants, and (iii) 3,572,635 common warrants.
18
The Company used a portion of the proceeds from the Offering to retire approximately $5,212 thousand of the outstanding conversion amount payable related to the Company’s secured convertible notes and all $900 thousand of the Company’s outstanding Series 1B Preferred Stock.
Subsequent to September 30, 2017.
The note matured on October 23, 2017 and was due and payable as of this date. The amendment extended the note's maturity to November 6, 2017. As of the date of this filing, the Company is waiting to hear from the vendor on how they wish to proceed with payment.
19
Item 2. Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and the notes to those financial statements appearing elsewhere in this Form 10-Q.10-Q and our audited financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022 which was filed with the SEC on March 10, 2023. This discussion and analysis contains statements of a forward-looking nature relating to future events or our future financial performance. As a result of many factors, our actual results may differ materially from those anticipated in these forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
Overview
We target high-volume production and high-value specialty solar markets. These include agrivoltaics, space, aerospace and high-value niche manufacturing/construction sectors. This strategy enables us to fully leverage what we believe are a company formedthe unique advantages of our technology, including flexibility, durability and attractive power to commercialize flexible photovoltaic modules usingweight and power to area performance. It further enables us to offer unique, differentiated solutions in large markets with less competition, and more attractive pricing.
Specifically, we focus on commercializing our proprietary technology. Forsolar technology in two high-value PV verticals:
I. Aerospace: Space, Near-space and Fixed Wing UAV
II. Agrivoltaics
We believe the threevalue proposition of Ascent’s proprietary solar technology not only aligns with the needs of customers in these verticals, but also overcomes many of the obstacles other solar technologies face in these unique markets. Ascent has the capability to design and
The integration of Ascent's solar modules into space, near space, and aeronautic vehicles with ultra-lightweight and flexible solar modules is an important market opportunity for the Company. Customers in this market have historically required a high level of durability, high voltage and conversion efficiency from solar module suppliers, and we believe our products are well as portable power applications for commercial and military users. suited to compete in this premium market.
For the nine months ended September 30, 2023, we generated$455,480 of total revenue. As of September 30, 2023, we had an accumulated deficit of $470,987,945.
Due to the high durability enabled by the monolithic integration employed inby our technology, the capability to customize modules into different form factors and what we believe is the industry leading light weight and flexibility provided by our modules, we believe that the potential applications for our products are numerous. We also remain focusedextensive, including integrated solutions anywhere that may need power generation such as vehicles in space or in flight, or dual-use installations on specialty solar applications which can fully leverage the unique propertiesagricultural land.
20
Commercialization and Manufacturing Strategy
We manufacture our products by affixing a thin film of highly efficient Copper-Indium-Gallium-diSelenide (“CIGS”) semiconductor material, onCIGS layer to a flexible, lightweight plastic substrate using a large format, roll-to-roll manufacturing process and then laser patterns the layersthat permits us to create interconnected PV cells, orfabricate our flexible PV modules in a process known as monolithic integration. Ouran integrated sequential operation. We use proprietary monolithic integration techniques which enable us to form complete PV modules with less orlittle to no costly back endback-end assembly cost of intercellinter- cell connections. Traditional PV manufacturers assemble PV modules by bonding or soldering discrete PV cells together. This manufacturing step typically increases manufacturing costs and at times proves detrimental to the overall yield and reliability of the finished product. By reducing or eliminating this added step using our proprietary monolithic integration techniques, we believe we can achieve cost savings in, and increase the reliability of, our PV modules. We believe our technology and manufacturing process, which results in a lighter, flexible module package, provides us with unique market opportunities relative to both the crystalline silicon (“c-Si”) based PV manufacturers that currently lead the PV market, as well as other thin-film PV manufacturers that use substrate materials such as glass, stainless steel or other metals that can be heavier and more rigid than plastics.
We plan to continue the development of our current PV technology to increase module efficiency, improve our manufacturing tooling and process capabilities and reduce manufacturing costs. We also plan to continue to take advantage of research and development contracts to fund a portion of this development.
In March, 2023, the Company redeployed its Thornton manufacturing facility to continuefocus on industrial commercialization of the development of our PV technologyCompany's patent-pending Perovskite solar technologies. In April 2023, the Company purchased manufacturing assets in orderZurich, Switzerland with plans to increase module efficiency, improve ourcommence manufacturing tooling and process capabilities and reduce manufacturing costs. We also planusing this equipment; however, in June 2023, Management exercised its put option on the equipment to continuesell it to take advantage of research and development contracts to fund a portion of this development.
Significant Trends, Uncertainties and Challenges
We believe the significant trends, uncertainties and challenges that directly or indirectly affect our financial performance and results of operations include:
21
Basis of Presentation: The accompanying unaudited condensed financial statements have been derived from the accounting records of Ascent Solar Technologies, Inc. as of September 30, 2023 and December 31, 2022, and the results of operations for the three and nine months ended September 30, 2023 and 2022.
Critical Accounting Policies and Estimates
Critical accounting policies used in reporting our financial results are reviewed by management on a regular basis. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Processes used to develop these estimates are evaluated on an ongoing basis. Estimates are based on historical experience and various other assumptions that are believed to be reasonable for making judgments about the carrying value of assets and liabilities. Actual results may differ as outcomes from assumptions may change.
The Company’s significant accounting policies were described in Note 3 to the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. There2022. Except for the adoption of ASU 2020-06, there have been no significant changes to our accounting policies as of September 30, 2017.
Results of Operations
Comparison of the Three Months Ended September 30, 20172023 and 2016
|
| Three Months Ended |
|
|
|
| ||||||
|
| 2023 |
|
| 2022 |
|
| $ Change |
| |||
Revenues |
|
|
|
|
|
|
|
|
| |||
Products |
| $ | 209,496 |
|
| $ | 6,344 |
|
| $ | 203,152 |
|
Milestone and engineering |
|
| 20,458 |
|
|
| - |
|
|
| 20,458 |
|
Total Revenues |
|
| 229,954 |
|
|
| 6,344 |
|
|
| 223,610 |
|
|
|
|
|
|
|
|
|
| ||||
Costs and Expenses |
|
|
|
|
|
|
|
|
| |||
Cost of Revenue |
|
| 692,752 |
|
|
| 409,819 |
|
|
| 282,933 |
|
Research, development and |
|
| 344,942 |
|
|
| 1,540,170 |
|
|
| (1,195,228 | ) |
Selling, general and administrative |
|
| 1,407,493 |
|
|
| 1,890,218 |
|
|
| (482,725 | ) |
Share-based compensation |
|
| 139,067 |
|
|
| 3,796,151 |
|
|
| (3,657,084 | ) |
Depreciation and amortization |
|
| 23,723 |
|
|
| 20,497 |
|
|
| 3,226 |
|
Total Costs and Expenses |
|
| 2,607,977 |
|
|
| 7,656,855 |
|
|
| (5,048,878 | ) |
Loss From Operations |
|
| (2,378,023 | ) |
|
| (7,650,511 | ) |
|
| 5,272,488 |
|
|
|
|
|
|
|
|
|
| ||||
Other Income/(Expense) |
|
|
|
|
|
|
|
|
| |||
Other income/(expense), net |
|
| 756,859 |
|
|
| 20,000 |
|
|
| 736,859 |
|
Interest Expense |
|
| (288,109 | ) |
|
| (252,571 | ) |
|
| (35,538 | ) |
Total Other Income/(Expense) |
|
| 468,750 |
|
|
| (232,571 | ) |
|
| 701,321 |
|
Income/(Loss) on Equity Method Investments |
|
| - |
|
|
| (27,484 | ) |
|
| 27,484 |
|
Net (Loss)/Income |
| $ | (1,909,273 | ) |
| $ | (7,910,566 | ) |
| $ | 6,001,293 |
|
Total Revenues.
OurCost of revenue. Cost of revenues is primarily comprised of repair and maintenance, material costs, and direct labor and manufacturing overhead expenses. Our Cost of revenues increased by $282,933, or 69%, for the three months ended September 30, 2016. A decrease2023 when compared to the same period in 2022. Increase in cost of $211,000. The following factors contributedrevenue is primarily due to expenses incurred from our asset acquisition of Flisom's manufacturing equipment and related costs partially offset by the decrease in revenue duringproduction costs with the three months ended September 30, 2017:
22
Research, development and manufacturing operations.
Selling,general and administrative. Selling, general and administrative expenses decreased by $482,725, or 26%, for the three months ended September 30, 2023 when compared to the same period in 2022. The decrease in costs is due primarily to a one-time termination expense of approximately $500,000 recognized with the departure of our former CEO in the prior period.
Share-based compensation. Share-based compensation expense decreased by $3,657,084 or 96% for the three months ended September 30, 2023 when compared to the same period in 2022. The decrease is primarily due to the employment termination of former CEO on April 26, 2023. The prior period expense also includes the immediate vesting of 20% of the former CEO's restricted stock units.
Other Income/Expense. Other income was $468,750 for the three months ended September 30, 2023, compared to other expense of $232,571 for the same period in 2022, an increase of $701,321. The increase is due primarily to a one-time employment retention credit received and a gain on lease modification, partially offset by an asset disposal.
Net Loss. Our Net Loss decreased by $6,001,293, or 76%, for the three months ended September 30, 2023 compared to the same period in 2022 due primarily to the items mentioned above.
Comparison of the Nine Months Ended September 30, 2023 and 2022
|
| Nine Months Ended |
|
|
|
| ||||||
|
| 2023 |
|
| 2022 |
|
| $ Change |
| |||
Revenues |
|
|
|
|
|
|
|
|
| |||
Product Revenue |
| $ | 395,106 |
|
| $ | 688,125 |
|
| $ | (293,019 | ) |
Milestone and engineering |
|
| 60,374 |
|
|
| 522,000 |
|
|
| (461,626 | ) |
Total Revenues |
|
| 455,480 |
|
|
| 1,210,125 |
|
|
| (754,645 | ) |
|
|
|
|
|
|
|
|
| ||||
Costs and Expenses |
|
|
|
|
|
|
|
|
| |||
Cost of Revenue |
|
| 1,820,816 |
|
|
| 1,519,703 |
|
|
| 301,113 |
|
Research, development and |
|
| 2,832,956 |
|
|
| 4,399,765 |
|
|
| (1,566,809 | ) |
Selling, general and administrative |
|
| 4,178,146 |
|
|
| 3,583,366 |
|
|
| 594,780 |
|
Share-based compensation |
|
| 2,104,378 |
|
|
| 3,796,151 |
|
|
| (1,691,773 | ) |
Depreciation and amortization |
|
| 73,947 |
|
|
| 54,998 |
|
|
| 18,949 |
|
Total Costs and Expenses |
|
| 11,010,243 |
|
|
| 13,353,983 |
|
|
| (2,343,740 | ) |
Loss From Operations |
|
| (10,554,763 | ) |
|
| (12,143,858 | ) |
|
| 1,589,095 |
|
|
|
|
|
|
|
|
|
| ||||
Other Income/(Expense) |
|
|
|
|
|
|
|
|
| |||
Other Income/(Expense), net |
|
| 766,859 |
|
|
| 22,000 |
|
|
| 744,859 |
|
Interest Expense |
|
| (2,118,023 | ) |
|
| (2,371,256 | ) |
|
| 253,233 |
|
Total Other Income/(Expense) |
|
| (1,351,164 | ) |
|
| (2,349,256 | ) |
|
| 998,092 |
|
Income/(Loss) on Equity Method Investments |
|
| (170 | ) |
|
| (27,486 | ) |
|
| 27,316 |
|
Net (Loss)/Income |
| $ | (11,906,097 | ) |
| $ | (14,520,600 | ) |
| $ | 2,614,503 |
|
Total Revenues. Our total revenues decreased by $754,645, or 62%, for the nine months ended September 30, 2023 when compared to the same period in 2022. This is primarily due to a large customer order in the prior period that was not repeated in the current period, partially offset by product revenue earned from fulfilling a supply agreement obligation under the Asset Purchase Agreement. Additionally, the Company recognized $512,000 in engineering revenue from TubeSolar in the prior period which was not repeated in the current period.
23
Cost of revenue. Cost of revenues is primarily comprised of repair and maintenance, material costs, and direct labor and overhead expenses. Our Cost of revenues increased by $301,113, or 20%, for the nine months ended September 30, 2023 when compared to the same period in 2022.The increase is primarily due to expenses from our asset acquisition of Flisom's manufacturing equipment and employee contracts, partially offset by a reduction in production costs by redeploying the Company's manufacturing facilities as a perovskite research facility.
Research, development and manufacturing operations. Research, development and manufacturing operations costs include costs incurred for product development and pre-production activities in our manufacturing facility. Research, development and manufacturing operations costs also include costs related to technology development and governmental contracts. The following factors contributed to the decrease in research,development. Research, development and manufacturing operations expenses during the three months ended September 30, 2017:
Decrease (Increase) to Net Loss For the Three Months Ended September 30, 2017 Compared to the Three Months Ended September 30, 2016 | ||||
Revenues | (211,000 | ) | ||
Cost of Revenue | 797,000 | |||
Research, development and manufacturing operations | ||||
Materials and Equipment Related Expenses | (19,000 | ) | ||
Personnel Related Expenses | 354,000 | |||
Consulting and Contract Services | 5,000 | |||
Facility Related Expenses | 9,000 | |||
Other Miscellaneous Costs | (1,000 | ) | ||
Selling, general and administrative expenses | ||||
Personnel, administrative, and facility Related Expenses | 436,000 | |||
Marketing Related Expenses | 529,000 | |||
Legal Expenses | 116,000 | |||
Public Company Costs | 26,000 | |||
Consulting and Contract Services | 52,000 | |||
Bad debt expense | 73,000 | |||
Settlement expense | 2,000 | |||
Depreciation and Amortization Expense | 113,000 | |||
Other Income / (Expense) | ||||
Interest Expense | 891,000 | |||
Other Income/Expense | (58,000 | ) | ||
Warrant Expense | (336,000 | ) | ||
Non-Cash Change in Fair Value of Derivatives and Gain/Loss on Extinguishment of Liabilities, net | 6,652,000 | |||
Decrease (Increase) to Net Loss | $ | 9,430,000 |
Selling,general and administrative. Selling, general and administrative expenses increased by $594,780, or 17% for the nine months ended September 30, 2016. A decrease of $870,000. The following factors contributed2023 when compared to the decreasesame period in revenue during the three months ended September 30, 2017:
Share-based compensation. Share-based compensation expense decreased by $1,691,773 or 45% for the nine months ended September 30, 2017 was $2,323,0002023 when compared to $4,769,000the same period in 2022. The decrease is primarily due to the employment termination of former CEO on April 26, 2023. The prior period expense also includes the immediate vesting of 20% of the former CEO's restricted stock units.
Other Income/Expense. Other expense was $1,351,164 for the nine months ended September 30, 2016,2023, compared to other expense of $2,349,256 for the same period in 2022, a decrease of $2,446,000.$998,092. The decreasedecline is due primarily attributed to a decreaseone-time employment retention credit received and a gain on lease modification. Additionally, the Company recording accelerating debt discount as interest expense in materials and labor costs as a resultthe prior year. With the adoption of a decreaseASU 2020-06, the accelerated debt discount is now recorded in production as compared to the nine months ended September 30, 2016. Cost of revenuesstockholders' equity.
Net Loss. Our Net Loss decreased by $2,614,503, or 18%, for the nine months ended September 30, 2017 is comprised of materials and freight of $789,000, direct labor of $53,000, and overhead of $1,481,000. Management believes our factory is currently significantly under-utilized, and a substantial increase in revenue would result in marginal increases to overhead. We are currently pursuing high-value PV markets.
Decrease (Increase) to Net Loss For the Nine Months Ended September 30, 2017 Compared to the Nine Months Ended September 30, 2016 | ||||
Revenues | (870,000 | ) | ||
Cost of Revenue | 2,446,000 | |||
Research, development and manufacturing operations | ||||
Materials and Equipment Related Expenses | 62,000 | |||
Personnel Related Expenses | 1,164,000 | |||
Consulting and Contract Services | 20,000 | |||
Facility Related Expenses | 55,000 | |||
Other Miscellaneous Costs | 1,000 | |||
Inventory impairment costs | (364,000 | ) | ||
Selling, general and administrative expenses | ||||
Personnel, Administrative, and Facility Related Expenses | 1,742,000 | |||
Marketing Related Expenses | 1,685,000 | |||
Legal Expenses | 432,000 | |||
Public Company Costs | 122,000 | |||
Bad Debt Expense | 246,000 | |||
Consulting and Contract Services | (55,000 | ) | ||
Settlement Expenses | (164,000 | ) | ||
Depreciation and Amortization Expense | 2,168,000 | |||
Other Income / (Expense) | ||||
Interest Expense | 305,000 | |||
Other Income/Expense | 489,000 | |||
Warrant Expense | (336,000 | ) | ||
Non-Cash Change in Fair Value of Derivatives and Gain/Loss on Extinguishment of Liabilities, net | 11,682,000 | |||
Decrease (Increase) to Net Loss | $ | 20,830,000 |
Liquidity and Capital Resources
In March, 2023, the Company redeployed its Thornton facilities from a manufacturing facility to a research and development facility. In April 2023, the Company purchased manufacturing assets in cashZurich, Switzerland with plans to commence manufacturing using this equipment; however, in June 2023, Management exercised its put option on the equipment and cash equivalents.
Additionally, projected producttotal revenues are not anticipated to result in a positive cash flow position for the year 2017 overall and, as of September 30, 2017, we have negative2023, the Company has working capital.capital deficit of $8,726,319. As such, cash liquidity would not be sufficient for the year ending December 31, 2017next twelve months and will require additional financing.
The Company has begun activities related to securing additional financing through strategic or financial investors and has closed on an equity offering on October 2, 2023, but there is no assurance wethe Company will be able to continue to raise additional capital on acceptable terms or at all. If ourthe Company’s revenues do not increase rapidly, and/or additional financing is not obtained, wethe Company will be required to significantly curtail operations to reduce costs and/or sell assets. Such actions would likely have an adverse impact on ourthe Company's future operations.
As a result of ourthe Company’s recurring losses from operations, and the need for additional financing to fund ourits operating and capital requirements, there is uncertainty regarding ourthe Company’s ability to maintain liquidity sufficient to operate ourits business effectively, which raises substantial doubt as to ourthe Company’s ability to continue as a going concern.
Management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. These unaudited condensed financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.
24
Statements of Cash Flows Comparison of the Nine Months Ended September 30, 2017 2023and 2016
For the nine months ended September 30, 2017,2023, our cash used in operations was $10.7 million$7,329,398 compared to $13.6 million$7,925,786 for the nine months ended September 30, 2016,2022, a decrease of $2.8 million. The$596,388. This decrease is due primarily due to the reductiondecreased Company expenses and revenue and timing of headcount and production, coupled with the transition out of certain consumer electronics markets and the sale of the EnerPlex brand.cash outflows. For the nine months ended September 30, 2017, our2023, cash provided byused in investing activities was $92.7 thousand as$3,863,963 compared to our cash$185,703 used in operations of $192.3 thousand, an increase of $285.0 thousand.investing activities for the nine months ended September 30, 2022. This increase ischange was primarily the result of investingthe asset acquisition in intellectual property ("IP") during the first quarter of 2016 and the sales of the EnerPlex brand IP during the first quarter of 2017.Zurich, Switzerland. During the nine months ended September 30, 2017, negative operating2023, net cash flowsused in operations of $10.7 million$7,329,398 were primarily funded through $11.6 million of funding received from promissory notes, and the use of cash customer receivables.
Payments by Year | |||||||||||||||||
Contractual Obligation | Total | Less than 1 year | 1-3 Years | 3-5 Years | More than 5 Years | ||||||||||||
Long Term Debt | $ | 7,874,857 | $ | 693,611 | $ | 2,080,832 | $ | 2,080,832 | $ | 3,019,582 | |||||||
Purchase Obligations | $ | 368,697 | 368,697 | ||||||||||||||
$ | 8,243,554 | $ | 1,062,308 | $ | 2,080,832 | $ | 2,080,832 | $ | 3,019,582 |
Off Balance Sheet Transactions
As of September 30, 2017 and December 31, 2016,2023, we did not have any off balanceoff-balance sheet arrangements as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.
Smaller Reporting Company Status
We are a “smaller reporting company” meaning that the market value of our stock held by non-affiliates is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million. As a smaller reporting company, we may rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and smaller reporting companies have reduced disclosure obligations regarding executive compensation.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Foreign Currency Exchange Risk
Although our reporting currency is the U.S. Dollar, we may conduct business and incur costs in the local currencies of other countries in which we may operate, make sales and buy materials. As a result, we are subject to currency translation risk. Further, changes in exchange rates between foreign currencies and the U.S. Dollar could affect our future net sales and cost of sales and could result in exchange losses.
We currently do not engage in hedging transactions to reduce our exposure to changes in currency exchange rates, although, we may do so in the future.
We hold no significant funds denominated in foreign currencies as of September 30, 2023.
Interest Rate Risk
Our exposure to market risks for changes in interest rates relates primarily to our cash equivalents.equivalents and investment portfolio. As of September 30, 2017,2023, our cash equivalents consisted only of federally insured operating and savings accounts held with financial institutions. From time to time, we may hold restricted funds, money market funds, investments in U.S. government securities and high qualityhigh-quality corporate securities. The primary objective of our investment activities is to preserve principal and provide liquidity on demand, while at the same time maximizing the income we receive from our investments without significantly increasing risk. The direct risk to us associated with fluctuating interest rates is limited to our investment portfolio, and we do not believe that a change in interest rates will have a significant impact on our financial position, results of operations, or cash flows.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission (SEC) rules and forms. Our disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information
25
required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management including our Chief Executive Officer and interim Principal Financial Officer,as appropriate to allow timely decisions regarding required disclosures. Our management conducted an evaluation required by Rules 13a-15 and 15d-15 under the Exchange Act of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15 and 15d-15 under the Exchange Act as of September 30, 2017.2023. Based on this evaluation, our Chief Executive Officermanagement concluded the design and interim Principal Financial Officer concluded that asoperation of September 30, 2017, our disclosure controls and procedures were not effective.
Changes in Internal Control Over Financial Reporting
There were no other changes in internal control over financial reporting during the nine months ended September 30, 20172023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 1. Legal Proceedings
From time to time, we were notified that a complaint (the “Lawsuit”) was filed by Jefferies & Company, Inc. ("Jefferies") against usmay become involved in state court locatedlegal proceedings arising in the County and Stateordinary course of New York.
Item 1A. Risk Factors
In addition to the other information set forth in this report,Form 10-Q, you should carefully consider the factors discussed in the updated risk factors disclosed under the heading “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022. Except as set forth below, there have been no material changes to our risk factors from those included in our Annual Report on Form 10-K filedfor the year ended December 31, 2022.
We may not be able to maintain our current listing for our common stock on April 17, 2017, whichthe Nasdaq Capital Market. Failure to maintain the listing of our common stock on Nasdaq could materiallyadversely affect the liquidity of our business, financial conditioncommon stock.
Our inability to maintain our current listing on Nasdaq may limit the liquidity of our stock, increase its volatility, and hinder our ability to raise capital. If our common stock is delisted by Nasdaq, our common stock may be eligible for quotation on an over-the-counter quotation system or future results.on the pink sheets. Upon any such delisting, our common stock would become subject to the regulations of the SEC relating to the market for penny stocks. A penny stock is any equity security not traded on a national securities exchange that has a market price of less than $5.00 per share. The risks describedregulations applicable to penny stocks may severely affect the market liquidity for our common stock and could limit the ability of shareholders to sell securities in the secondary market. In such a case, an investor may find it more difficult to dispose of or obtain accurate quotations as to the market value of our Annual Reportcommon stock, and there can be no assurance that our common stock will be eligible for trading or quotation on Form 10-K filed on April 17, 2017 are not the only risks facing our company. Additional risks and uncertainties not currently known to usany alternative exchanges or that we currently deem to be immaterial also may materiallymarkets.
Delisting from Nasdaq could adversely affect our ability to raise additional financing through public or private sales of equity securities, would significantly affect the ability of investors to trade our securities and would negatively affect the value and liquidity of our common stock. Delisting could also have other negative results, including the potential loss of confidence by employees, the loss of institutional investor interest and fewer business financial conditiondevelopment opportunities.
On March 23, 2023 the Company received a written notice (the “Notice”) from the Listing Qualifications Department of Nasdaq indicating that the Company was not in compliance with the $1.00 Minimum Bid Price requirement set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on The Nasdaq Capital Market (the “Bid Price Requirement”). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company was provided 180 calendar days to regain compliance with the Bid Price Requirement.
On July 28, 2023, the Company received notice (the “Second Notice”) that Nasdaq had determined that the Company’s common stock had a closing bid price of $0.10 or future results.
In addition, Nasdaq Listing Rule 5550(b)(1) (the “Stockholders’ Equity Rule”) requires companies listed on Nasdaq to maintain a minimum of $2,500,000 in stockholders’ equity for continued listing. On May 25, 2023, we received a letter from Nasdaq indicating that we were not in compliance with the Stockholders’ Equity Rule.
On July 28, 2023, the Company received notice that Nasdaq had determined that the Company’s common stock had a closing bid price of $0.10 or less for ten consecutive trading days triggering application of Listing Rule 5810(3)(A)(iii) which states in part: if during any compliance period specified in Rule 5810(c)(3)(A), a company’s security has a closing bid price of $0.10 or less for ten consecutive trading days, the Listing Qualifications Department shall issue a Staff Delisting Determination under Rule 5810 with respect to that security (the “Low Priced Stocks Rule”). As a result, the Nasdaq staff determined to delist
27
the Company’s common stock from Nasdaq, unless the Company timely requests an appeal of the staff’s determination to a Hearings Panel (the “Panel”), pursuant to the procedures set forth in the Nasdaq Listing Rule 5800 Series. The Company requested a hearing before the Panel, which was scheduled for October 12, 2023.
On September 12, 2023, the Company implemented a reverse stock split in an effort to regain compliance with the $1 minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”), and by letter dated September 29, 2023, the Company was notified by the Staff that the Company had regained compliance with the Bid Price Rule. The Staff, however, determined that, following the reverse split, the Company no longer satisfied the minimum 500,000 publicly held shares requirement set forth in Nasdaq Listing Rule 5550(a)(4) (the “Public Float Rule”).
On October 2, 2023, the Company completed a public offering of units (each unit consisting of (x) one share or one prefunded warrant and (y) one common stock warrant) for gross proceeds of $10.3 million. As a result of the offering, the Company had the minimum of $2.5 million in stockholders’ equity and has therefore regained compliance with the Equity Rule. The offering also resulted in an increase in the Company’s publicly held shares above the minimum Nasdaq threshold of 500,000 shares and as such the Company believes it has regained compliance with the Public Float Rule.
On October 11, 2023, the Company received notice from the Nasdaq Listing Qualifications staff that the Company has regained compliance with Nasdaq’s minimum $2.5 million stockholders’ equity requirement in Listing Rule 5550(b)(1) and the minimum 500,000 publicly held shares requirement under Listing Rule 5550(a)(4), and that the Company is therefore in compliance with the Nasdaq Capital Market’s listing requirements.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Not required.
Issuer Purchases of Equity Securities
We did not repurchase any of our equity securities during the nine months ended September 30, 2023.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Item 6. Exhibits
The exhibits listed on the accompanying Index to Exhibits on this Form 10-Q are filed or incorporated into this Form 10-Q by reference.
EXHIBIT INDEX
Exhibit No. | Description | |
3.1 | ||
3.2 | ||
3.3 | ||
3.4 | ||
3.5 | ||
3.6 | ||
3.7 | ||
3.8 | ||
3.9 | ||
3.10 | ||
3.11 | ||
3.12 | ||
3.13 | ||
3.14 | ||
3.15 | ||
3.16 | ||
29
Table of exhibits is found on page 47Contents
3.17 | ||
3.18 | ||
3.19 | ||
4.1 | ||
4.2 | ||
4.3 | ||
4.4 | ||
4.5 | ||
4.6 | ||
4.7 | ||
4.8 | ||
4.9 | ||
10.1CTR | ||
10.2 CTR | ||
10.3 | ||
10.4 CTR | ||
10.5 | ||
10.6 CTR | ||
10.7 | ||
30
10.8† | ||
10.9† | ||
10.10+ | ||
10.11+ | ||
10.12 | ||
10.13 | ||
10.14†CTR | ||
10.15† | ||
10.16 | ||
10.17 | ||
10.18 | ||
10.19 | ||
10.20 | ||
10.21 | ||
10.22 | ||
10.23 | ||
10.24 | ||
10.25 | ||
10.26 | ||
10.27 | ||
10.28 | ||
10.29† | CEO Employment Agreement between the Company and Paul Warley dated as of May 1, 2023 | |
31
10.30 | ||
10.31 | ||
10.32 | ||
10.33† | ||
10.34† | ||
31.1* | Chief Executive Officer Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2* | Chief Financial Officer Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1* | Chief Executive Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002 | |
32.2* | Chief Financial Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002 | |
101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
* | Filed herewith | |
CTR | Portions of this exhibit have been omitted pursuant to a request for confidential treatment. | |
† | Denotes management contract or compensatory plan or arrangement. | |
+ | Certain portions of the exhibit have been omitted pursuant to Rule 601(b)(10) of Regulation S-K. The omitted information is (i) not material and (ii) would likely cause competitive harm to the Company if publicly disclosed. |
32
ASCENT SOLAR TECHNOLOGIES, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the
November 14, 2023 | By: | / |
Paul Warley Chief Executive Officer (Principal Executive |
Officer) | ||
November 14, 2023 | By: | /s/ JIN JO |
33