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 ended SeptemberJune 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 | OTC |
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,August 6, 2021, there were 8,931,765,83018,945,583,471 shares of our common stock issued and outstanding.
ASCENT SOLAR TECHNOLOGIES, INC.
Quarterly Report on Form 10-Q
For the Period Ended
Table of Contents
Item 1. | 1 | |
1 | ||
2 | ||
3 | ||
5 | ||
6 | ||
Item 2. | 16 | |
Item 3. | 21 | |
Item 4. | 21 | |
24 | ||
Item 1. | 24 | |
Item 1A. | 24 | |
Item 2. | 24 | |
Item 3. | 24 | |
Item 4. | 24 | |
Item 5. | 24 | |
Item 6. | 25 | |
27 |
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 “Business.” 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:
• | The impact of the novel coronavirus (“COVID-19”) pandemic on our business, results of operations, cash flows, financial condition and liquidity; |
• | Our operating history and lack of profitability; |
• | Our ability to develop demand for, and sales of, our products; |
• | Our ability to attract and retain qualified personnel to implement our business plan and corporate growth strategies; |
• | Our ability to develop sales, marketing and distribution capabilities; |
• | Our ability to successfully develop and maintain strategic relationships with key partners, including OEMs, system integrators, distributors, and e-commerce companies, who deal directly with end users in our target markets; |
• | The accuracy of our estimates and projections; |
• | Our ability to secure additional financing to fund our short-term and long-term financial needs; |
• | Our ability to maintain the listing of our common stock on the OTC Market; |
• | The commencement, or outcome, of legal proceedings against us, or by us, including ongoing ligation proceedings; |
• | Changes in our business plan or corporate strategies; |
• | The extent to which we are able to manage the growth of our operations effectively, both domestically and abroad, whether directly owned or indirectly through licenses; |
• | The supply, availability and price of equipment, components and raw materials, including the elements needed to produce our photovoltaic modules; |
• | Our ability to expand and protect the intellectual property portfolio that relates to our consumer electronics, photovoltaic modules and processes; |
• | Our ability to implement remediation measures to address material weaknesses in internal control; |
• | The extent to which our interests align with or deviate from our controlling stockholders; |
• | General economic and business conditions, and in particular, conditions specific to consumer electronics and the solar power industry; and |
• | Other risks and uncertainties discussed in greater detail elsewhere in this Quarterly Report and in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2020. |
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
(unaudited)
|
| June 30, |
|
| December 31, |
| ||
|
| 2021 |
|
| 2020 |
| ||
ASSETS |
|
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 1,357,633 |
|
| $ | 167,725 |
|
Trade receivables, net of allowance of $26,000 and $45,833, respectively |
|
| - |
|
|
| 5,539 |
|
Inventories, net |
|
| 589,460 |
|
|
| 534,431 |
|
Prepaid and other current assets |
|
| 504,552 |
|
|
| 71,575 |
|
Total current assets |
|
| 2,451,645 |
|
|
| 779,270 |
|
Property, Plant and Equipment: |
|
| 24,981,562 |
|
|
| 24,867,176 |
|
Accumulated depreciation |
|
| (24,853,856 | ) |
|
| (24,848,408 | ) |
|
|
| 127,706 |
|
|
| 18,768 |
|
Other Assets: |
|
|
|
|
|
|
|
|
Operating lease right-of-use assets, net |
|
| 5,314,195 |
|
|
| 5,633,663 |
|
Patents, net of accumulated amortization of $486,590 and $467,102, respectively |
|
| 402,700 |
|
|
| 439,836 |
|
Other non-current assets |
|
| 625,000 |
|
|
| 500,000 |
|
Total Assets |
| $ | 8,921,246 |
|
| $ | 7,371,537 |
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
| $ | 661,114 |
|
| $ | 736,986 |
|
Related party payables |
|
| 48,571 |
|
|
| 135,834 |
|
Accrued expenses |
|
| 756,239 |
|
|
| 1,518,212 |
|
Accrued interest |
|
| 462,972 |
|
|
| 438,063 |
|
Notes payable |
|
| 250,000 |
|
|
| 250,000 |
|
Current portion of operating lease liability |
|
| 610,451 |
|
|
| 575,404 |
|
Promissory notes, net |
|
| 193,200 |
|
|
| 193,200 |
|
Convertible notes, net |
|
| 250,000 |
|
|
| - |
|
Embedded derivative liability |
|
| - |
|
|
| 5,303,984 |
|
Total current liabilities |
|
| 3,232,547 |
|
|
| 9,151,683 |
|
Long-Term Liabilities: |
|
|
|
|
|
|
|
|
Non-current operating lease liabilities |
|
| 4,861,502 |
|
|
| 5,179,229 |
|
Non-current secured promissory notes, net |
|
| - |
|
|
| 5,405,637 |
|
Non-current convertible notes, net |
|
| 7,858,651 |
|
|
| 7,813,048 |
|
Accrued warranty liability |
|
| 21,225 |
|
|
| 14,143 |
|
Total liabilities |
|
| 15,973,925 |
|
|
| 27,563,740 |
|
Stockholders’ Deficit: |
|
|
|
|
|
|
|
|
Series A preferred stock, $.0001 par value; 750,000 shares authorized; 48,100 and 48,100 shares issued and outstanding, respectively ($776,949 and $752,765 Liquidation Preference, respectively) |
|
| 5 |
|
|
| 5 |
|
Common stock, $0.0001 par value, 20,000,000,000 authorized; 18,345,583,473 and 18,102,583,473 shares issued and outstanding, respectively |
|
| 1,834,558 |
|
|
| 1,810,258 |
|
Additional paid in capital |
|
| 412,742,098 |
|
|
| 399,780,319 |
|
Accumulated deficit |
|
| (421,629,340 | ) |
|
| (421,782,785 | ) |
Total stockholders’ deficit |
|
| (7,052,679 | ) |
|
| (20,192,203 | ) |
Total Liabilities and Stockholders’ Deficit |
| $ | 8,921,246 |
|
| $ | 7,371,537 |
|
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 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| For the Three Months Ended June 30, |
|
| For the Six Months Ended June 30, |
| ||||||||||
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Products | $ | 380,488 |
|
| $ | 50,062 |
|
| $ | 545,646 |
|
| $ | 54,152 |
|
Total Revenues |
| 380,488 |
|
|
| 50,062 |
|
|
| 545,646 |
|
|
| 54,152 |
|
Costs and Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of revenue |
| 423,861 |
|
|
| 22,923 |
|
|
| 496,643 |
|
|
| 95,628 |
|
Research, development and manufacturing operations |
| 901,850 |
|
|
| 176,067 |
|
|
| 1,629,886 |
|
|
| 335,532 |
|
Selling, general and administrative |
| 800,416 |
|
|
| 119,870 |
|
|
| 1,362,126 |
|
|
| 189,393 |
|
Depreciation and amortization |
| 12,064 |
|
|
| 55,389 |
|
|
| 24,936 |
|
|
| 111,651 |
|
Total Costs and Expenses |
| 2,138,191 |
|
|
| 374,249 |
|
|
| 3,513,591 |
|
|
| 732,204 |
|
Loss from Operations |
| (1,757,703 | ) |
|
| (324,187 | ) |
|
| (2,967,945 | ) |
|
| (678,052 | ) |
Other Income/(Expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income/(expense), net |
| - |
|
|
| - |
|
|
| 800 |
|
|
| 259,600 |
|
Interest expense |
| (169,472 | ) |
|
| (1,032,774 | ) |
|
| (731,550 | ) |
|
| (2,263,466 | ) |
Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net |
| 234,236 |
|
|
| - |
|
|
| 3,852,140 |
|
|
| 7,717,150 |
|
Total Other Income/(Expense) |
| 64,764 |
|
|
| (1,032,774 | ) |
|
| 3,121,390 |
|
|
| 5,713,284 |
|
Net Income/(Loss) | $ | (1,692,939 | ) |
| $ | (1,356,961 | ) |
| $ | 153,445 |
|
| $ | 5,035,232 |
|
Net Income/(Loss) Per Share (Basic) | $ | (0.00 | ) |
| $ | (0.00 | ) |
| $ | 0.00 |
|
| $ | 0.00 |
|
Net Income/(Loss) Per Share (Diluted) | $ | (0.00 | ) |
| $ | (0.00 | ) |
| $ | 0.00 |
|
| $ | 0.00 |
|
Weighted Average Common Shares Outstanding (Basic) |
| 18,345,583,473 |
|
|
| 5,168,303,334 |
|
|
| 18,258,466,806 |
|
|
| 4,963,732,492 |
|
Weighted Average Common Shares Outstanding (Diluted) |
| 18,345,583,473 |
|
|
| 5,168,303,334 |
|
|
| 163,341,800,140 |
|
|
| 65,019,562,492 |
|
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 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSCHANGES IN STOCKHOLDERS’ DEFICIT
(unaudited)
For the Three and Six Months Ended June 30, 2021
|
| Series A Preferred Stock |
|
| Series 1A Preferred Stock |
|
| Common Stock |
|
| Additional Paid-In |
|
| Accumulated |
|
| Total Stockholders’ Equity |
| ||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| (Deficit) |
| |||||||||
Balance, December 31, 2020 |
|
| 48,100 |
|
| $ | 5 |
|
|
| 1,300 |
|
| $ | - |
|
|
| 18,102,583,473 |
|
| $ | 1,810,258 |
|
| $ | 399,780,319 |
|
| $ | (421,782,785 | ) |
| $ | (20,192,203 | ) |
Proceeds from issuance of Series 1A Preferred Stock |
|
| - |
|
|
| - |
|
|
| 2,500 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,500,000 |
|
|
| - |
|
|
| 2,500,000 |
|
Proceeds from issuance of Common Stock |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 75,000,000 |
|
|
| 7,500 |
|
|
| 2,992,500 |
|
|
| - |
|
|
| 3,000,000 |
|
Conversion of Global Ichiban Note into Common Shares |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 168,000,000 |
|
|
| 16,800 |
|
|
| 5,783,200 |
|
|
| - |
|
|
| 5,800,000 |
|
Relieved on Conversion of Derivative Liability |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,686,079 |
|
|
| - |
|
|
| 1,686,079 |
|
Net Income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,846,384 |
|
|
| 1,846,384 |
|
Balance at March 31, 2021 |
|
| 48,100 |
|
|
| 5 |
|
|
| 3,800 |
|
|
| - |
|
|
| 18,345,583,473 |
|
|
| 1,834,558 |
|
|
| 412,742,098 |
|
|
| (419,936,401 | ) |
|
| (5,359,740 | ) |
Net Loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,692,939 | ) |
|
| (1,692,939 | ) |
Balance at June 30, 2021 |
|
| 48,100 |
|
| $ | 5 |
|
|
| 3,800 |
|
| $ | - |
|
|
| 18,345,583,473 |
|
| $ | 1,834,558 |
|
| $ | 412,742,098 |
|
| $ | (421,629,340 | ) |
| $ | (7,052,679 | ) |
3
ASCENT SOLAR TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(unaudited)
For the Three and Six Months Ended June 30, 2020
|
| Series A Preferred Stock |
|
| Series 1A Preferred Stock |
|
| Common Stock |
|
| Additional Paid-In |
|
| Accumulated |
|
| Total Stockholders’ Equity |
| ||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| (Deficit) |
| |||||||||
Balance, December 31, 2019 |
|
| 48,100 |
|
| $ | 5 |
|
|
| - |
|
| $ | - |
|
|
| 4,759,161,650 |
|
| $ | 475,917 |
|
| $ | 397,817,526 |
|
| $ | (423,400,229 | ) |
| $ | (25,106,781 | ) |
Net Income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 6,392,193 |
|
|
| 6,392,193 |
|
Balance at March 31, 2020 |
|
| 48,100 |
|
|
| 5 |
|
|
| - |
|
|
| - |
|
|
| 4,759,161,650 |
|
|
| 475,917 |
|
|
| 397,817,526 |
|
|
| (417,008,036 | ) |
|
| (18,714,588 | ) |
Interest and Dividend Expense paid with Common Stock |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 21,328,800 |
|
|
| 2,132 |
|
|
| - |
|
|
| - |
|
|
| 2,132 |
|
Conversion of Bellridge Note into Common Shares |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 450,000,000 |
|
|
| 45,000 |
|
|
| - |
|
|
| - |
|
|
| 45,000 |
|
Net Loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,356,961 | ) |
|
| (1,356,961 | ) |
Balance at June 30, 2020 |
|
| 48,100 |
|
| $ | 5 |
|
|
| - |
|
| $ | - |
|
|
| 5,230,490,450 |
|
| $ | 523,049 |
|
| $ | 397,817,526 |
|
| $ | (418,364,997 | ) |
| $ | (20,024,417 | ) |
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 | $ | — |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
ASCENT SOLAR TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
|
| For the Six Months Ended |
| |||||
|
| June 30, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Operating Activities: |
|
|
|
|
|
|
|
|
Net income/(loss) |
| $ | 153,445 |
|
| $ | 5,035,232 |
|
Adjustments to reconcile net income (loss) to cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 24,936 |
|
|
| 111,651 |
|
Operating lease asset amortization |
|
| 319,468 |
|
|
| — |
|
Realized (gain) on sale and foreclosure of assets |
|
| — |
|
|
| (254,600 | ) |
Amortization of deferred financing costs |
|
| — |
|
|
| 2,692 |
|
Non-cash interest expense |
|
| — |
|
|
| 315,974 |
|
Amortization of debt discount |
|
| 689,965 |
|
|
| 1,266,120 |
|
Bad debt expense |
|
| — |
|
|
| (141 | ) |
Warranty reserve |
|
| 7,082 |
|
|
| (7,596 | ) |
Gain on extinguishment of liabilities, net |
|
| (3,852,140 | ) |
|
| (7,717,150 | ) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
| 5,539 |
|
|
| 141 |
|
Inventories |
|
| (55,029 | ) |
|
| 23,843 |
|
Prepaid expenses and other current assets |
|
| (557,977 | ) |
|
| 3,583 |
|
Accounts payable |
|
| (73,672 | ) |
|
| (319,337 | ) |
Related party payable |
|
| (87,263 | ) |
|
| — |
|
Operating lease liabilities |
|
| (282,680 | ) |
|
|
|
|
Accrued interest |
|
| 24,909 |
|
|
| 495,908 |
|
Accrued expenses |
|
| (529,937 | ) |
|
| 665,909 |
|
Net cash (used in) operating activities |
|
| (4,213,354 | ) |
|
| (377,771 | ) |
Investing Activities: |
|
|
|
|
|
|
|
|
Proceeds on sale of assets |
|
| — |
|
|
| 254,600 |
|
Payments on purchase of assets |
|
| (114,386 | ) |
|
| — |
|
Patent activity costs |
|
| 17,648 |
|
|
| (156 | ) |
Net cash (used in) provided by investing activities |
|
| (96,738 | ) |
|
| 254,444 |
|
Financing Activities: |
|
|
|
|
|
|
|
|
Repayment of debt |
|
| — |
|
|
| (5,000 | ) |
Proceeds from issuance of debt |
|
| — |
|
|
| 443,200 |
|
Proceeds from issuance of stock |
|
| 5,500,000 |
|
|
| — |
|
Net cash provided by financing activities |
|
| 5,500,000 |
|
|
| 438,200 |
|
Net change in cash and cash equivalents |
|
| 1,189,908 |
|
|
| 314,873 |
|
Cash and cash equivalents at beginning of period |
|
| 167,725 |
|
|
| — |
|
Cash and cash equivalents at end of period |
| $ | 1,357,633 |
|
| $ | 314,873 |
|
Non-Cash Transactions: |
|
|
|
|
|
|
|
|
Non-cash conversions of preferred stock and convertible notes to equity |
| $ | 5,800,000 |
|
| $ | 47,133 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION
The Company is focusing on integrating its PV products into high value markets such as aerospace, satellites, near earth orbiting vehicles, fixed-wingand fixed wing unmanned aerial vehicles (UAV), military, and emergency preparedness.. The value proposition of Ascent’s proprietary solar technology not only aligns with the needs of customers in these industries, but also overcomes many of the obstacles other solar technologies face in these unique markets. Ascent has the capability to design and develop finished products for end users in these areas as well as collaborate with strategic partners to design and develop custom integrated solutions for products like fixed-wing UAVs. Ascent sees significant overlap of the needs of end users across some of these industries and can achieve economies of scale in sourcing, development, and production in commercializing products for these customers.
NOTE 2. BASIS OF PRESENTATION
The accompanying, unaudited, condensed consolidated financial statements have been derived from the accounting records of Ascent Solar Technologies, Inc., and Ascent Solar (Asia) Pte. Ltd., and Ascent Solar (Shenzhen) Co., Ltd. (collectively, "the Company"the “Company") as of SeptemberJune 30, 20172021 and December 31, 2016,2020, and the results of operations for the three and ninesix months ended SeptemberJune 30, 20172021 and 2016. Ascent Solar (Shenzhen) Co., Ltd. is wholly owned by2020. 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
December 31,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
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,Derivatives: The Company evaluates its financial instruments under FASB ASC 815, "Derivatives and Hedging" to determine whether the instruments contain an embedded derivative. When an embedded derivative is present, the instrument is evaluated for a fair value adjustment upon issuance and at the end of every reporting period. Any adjustments to fair value are treated as gains and losses in fair values of derivatives and are recorded in the Condensed Consolidated Statements of Operations.
Refer to Notes 8, 10 and 11 for further discussion on the embedded derivatives of each instrument.
Paycheck Protection Program Loan: The Company has elected to account for the forgivable loan received under the Paycheck Protection Program (“PPP”) provisions of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act as a debt instrument and to accrue interest on the outstanding loan balance. Additional interest at a market rate (due to the stated interest rate of the PPP loan being below market) is not imputed, as the transactions where interest rates prescribed by governmental agencies are excluded from the scope of accounting guidance on imputing interest. The proceeds from the loan will remain recorded as a liability until either (1) the loan is, in part or wholly, forgiven and the Company has been legally released or (2) the Company repays the loan to the lender.
Refer to Note 15 for further discussion.
6
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) from net income. Diluted earnings per share has been computed by dividing net income adjusted on an if-converted basis for the period by the weighted average number of common shares and potentially dilutive common share outstanding (which consist of options and convertible securities using the treasury stock method or the if-converted method, as applicable, to the extent they are dilutive).
Net income (loss) for purposes of computing diluted EPS was $456,486 and $2,353,444 for the six-month period ended June 30, 2021 and 2020, respectively. There were approximately 145 billion and approximately 60 billion dilutive common shares for the six months ended June 30, 2021, and 2020, respectively.
Recently Adopted or to be Adopted Accounting Policies
In May 2014,August 2020, the FASB issued ASU No. 2014-09,
Other new pronouncements issued but not effective as of June 30, 2021 are not expected to have a material impact on the FASB issued ASU No. 2017-11 Part I,
NOTE 4. LIQUIDITY, AND CONTINUED OPERATIONS,
During the ninesix months ended SeptemberJune 30, 20172021 and the year ended December 31, 2016,2020, the Company entered into multiple financing agreements to fund operations. Further discussion of these transactions can be found in Notes 8 through 209, 10, 11 and 14 of the financial statements presented as of, and for, the ninesix months ended SeptemberJune 30, 2017,2021, and in Notes 8, 9, through 2010, 11, 12, 15 and 22 of the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016.
The Company has continued limited PV production at its manufacturing facility. The Company 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. During the ninesix months ended SeptemberJune 30, 20172021 the Company used $10.7 million$4,213,354 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.
Additional projected product revenues are not anticipated to result in a positive cash flow position for the year 2017next twelve months overall and, as of SeptemberJune 30, 2017,2021, the Company has negativea deficit in working capital.capital of $780,902. As such, cash liquidity is not sufficient for the year ending December 31, 2017next twelve months and will require additional financing.
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 condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.
7
NOTE 5. PROPERTY, PLANT AND EQUIPMENT
The following table summarizes property, plant and equipment as of
|
| As of June 30, |
|
| As of December 31, |
| ||
|
| 2021 |
|
| 2020 |
| ||
Furniture, fixtures, computer hardware and computer software |
| $ | 527,862 |
|
| $ | 489,421 |
|
Manufacturing machinery and equipment |
|
| 24,453,700 |
|
|
| 24,377,755 |
|
Depreciable property, plant and equipment |
|
| 24,981,562 |
|
|
| 24,867,176 |
|
Less: Accumulated depreciation and amortization |
|
| (24,853,856 | ) |
|
| (24,848,408 | ) |
Net property, plant and equipment |
| $ | 127,706 |
|
| $ | 18,768 |
|
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 |
The Company analyzes its long-lived assets for impairment, both individually and as a group, whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.
Depreciation expense for the three and nine months ended
On July 29, 2020 the Company’s owned facility at 12300 Grant Street, Thornton, CO 80241 (the “Building”) was foreclosed by the Building’s first lien holder (“Mortgage Holder”) and sold at public auction. The successful bidder for the Building was the Mortgage Holder, at the price of $7.193 million. As a result, the Company’s obligations to Mortgage Holder and all of the Company’s outstanding real property taxes on the Building were considered fully repaid.
On September 21, 2020, the Company entered into a lease agreement with 12300 Grant LLC (“Landlord”), an affiliated company of the Mortgage Holder, for approximately 100,000 rentable square feet of the Building (the “Lease”). The lease is classified as an operating lease and accounted for accordingly. The 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 shall adjust 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.
At June 30, 2021, the Company recorded an operating lease asset and liability totaling $5,314,195 and $5,471,953, respectively. During the three and six months ended June 30, 2021, the Company recorded operating lease costs included in Selling, general, and administrative expense on the condensed consolidated Statement of Operations totaling $258,392 and $516,785, respectively.
Future maturities of the operating lease liability are as follows:
Remainder of 2021 |
| $ | 480,000 |
|
2022 |
|
| 988,800 |
|
2023 |
|
| 1,018,464 |
|
2024 |
|
| 1,049,018 |
|
2025 |
|
| 1,080,488 |
|
Thereafter |
|
| 2,259,194 |
|
Total lease payments |
|
| 6,875,964 |
|
Less amounts representing interest |
|
| (1,404,011 | ) |
Present value of lease liability |
| $ | 5,471,953 |
|
The remaining lease term and discount rate of the operating lease is 78.5 months and 7.0%, respectively.
8
NOTE 6. INVENTORIES
Inventories, net of reserves, consisted of the following at
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 |
|
| As of June 30, |
|
| As of December 31, |
| ||
|
| 2021 |
|
| 2020 |
| ||
Raw materials |
| $ | 589,343 |
|
| $ | 525,626 |
|
Work in process |
|
| 100 |
|
|
| - |
|
Finished goods |
|
| 17 |
|
|
| 8,805 |
|
Total |
| $ | 589,460 |
|
| $ | 534,431 |
|
2017 | $ | 82,375 | |
2018 | 343,395 | ||
2019 | 366,757 | ||
2020 | 391,709 | ||
2021 | 418,358 | ||
Thereafter | 3,941,599 | ||
$ | 5,544,193 |
NOTE 8.7. NOTES PAYABLE
On June 30, 2017, the Company entered into an agreement with a vendor (“Vendor”) to convert the balance of their account into a note payable in the amount of $250,000. The note bears interest of 5% per annum and maturesmatured on February 28, 2018; all outstanding principal and accrued interest is due and payable upon maturity.2018. As of SeptemberJune 30, 2017,2021, the Company had not made any payments on these notes andthis note, the accrued interest was $3,151.
NOTE 8. SECURED PROMISSORY NOTES
Global Ichiban Secured Promissory Notes
Prior to 2021, the Company had issued a secured convertible promissory note to Global Ichiban Limited (“Global”) that had a remaining principal balance of $5,800,000, and 0 accrued interest, as of January 1, 2021.
The note was to mature on September 30, 2022. Principal, if not converted, was to be payable in a lump sum on September 30, 2022. The note did not bear any interest. Customary default provisions applied. The note was secured by a lien on substantially all of the Company’s assets pursuant to the Security Agreement dated November 30, 2017 (the “Security Agreement”) entered into between the Company and Global.
The conversion option associated with the note was deemed to include an embedded derivative that required bifurcation and separate accounting. Refer to Note 11. Derivative Liabilities for further details.
On March 9, 2021, the Company entered into a settlement agreement (“Settlement”) with Global. Pursuant to the Settlement, the Company issued 168,000,000 shares of Common Stock of the Company (“Settlement Shares”) to Global in exchange for the cancellation of the outstanding secured promissory note of $5,800,000 (the “Secured Note”). The Secured Note, which was originally scheduled to mature on September 30, 2022, had a customervariable-rate conversion feature that entitled Global to convert into shares of Common Stock of the credit balanceCompany at 80% of their account intothe 5-day average closing bid-price prior to any conversion. The Secured Note also had a note payablelien on substantially all of the Company’s assets including intellectual properties. Following the Settlement, the lien was removed and the Company’s assets are currently unencumbered.
NOTE 9. PROMISSORY NOTES
SBA PPP
On April 17, 2020, the Company obtained a PPP Loan from Vectra Bank Colorado (“Vectra”) in the aggregate amount of $193,200, which was established under the CARES Act, as administered by the Small Business Association (“SBA”). Under the terms of the CARES Act and the PPP, all or a portion of the principal amount of the PPP Loan is subject to forgiveness so long as, over the 24-week period following the Company’s receipt of the proceeds of the PPP Loan, the Company uses those proceeds for payroll costs, rent, utility costs or the maintenance of employee and compensation levels. The PPP Loan is unsecured, guaranteed by the SBA, and has a two-year term, maturing on April 17, 2022. Interest accrues on the loan beginning with the initial disbursement; however, payments of principal and interest are deferred until Vectra’s determination of the amount of $215,234. The note bears interest of 5% per annum and matures on September 30, 2018. Monthly payments of $18,426 commence on October 30, 2017.
9
NOTE 10. CONVERTIBLE NOTES
The following table provides a summary of the activity of the Company's unsecured, convertible, promissory notes:
| Principal Balance 12/31/2020 |
| Less: Discount Balance |
| Net Principal Balance 12/31/2020 |
| Principal Balance 6/30/2021 |
| Less: Discount Balance |
| Net Principal Balance 6/30/2021 |
| ||||||
BD 1 Notes (related party) | $ | 10,500,000 |
| $ | (2,936,952 | ) | $ | 7,563,048 |
| $ | 10,500,000 |
| $ | (2,641,349 | ) | $ | 7,858,651 |
|
Crowdex Note (related party) |
| 250,000 |
|
| 0 |
|
| 250,000 |
|
| 250,000 |
|
| 0 |
|
| 250,000 |
|
| $ | 10,750,000 |
| $ | (2,936,952 | ) | $ | 7,813,048 |
| $ | 10,750,000 |
| $ | (2,641,349 | ) | $ | 8,108,651 |
|
Penumbra/Crowdex Convertible Note
As of January 1, 2021, Crowdex Investment, LLC (“Crowdex”) held a convertible promissory note with an original maturity dateaggregate principal balance of November 26, 2016. $250,000.
The notes bear interest of 6% per annum andaggregate principal and interestamount (together with accrued interest) was scheduled to mature on the notes are payable upon maturity. The notes are unsecured and not convertible into equity shares of the Company.
At June 30, 2021, the note had a principal balance of $250,000 and are unsecured.
BD 1 Convertible Note
During September 2020, a number of the promissory notes described above matured. The Company and the private investor agreed to pay the interest accrued on these notes, as of the maturity dates, and extend the notes another three months without the Company being in default. Through August 30, 2017, $143,148 interest was paid.
On December 18, 2020, the Company entered into a securities exchange agreement (“BD1 Exchange Agreement”) with BD 1. Pursuant to the terms of the BD1 Exchange Agreement, BD 1 agreed to surrender and exchange all of its outstanding promissory note having anotes with principal and accrued interest balances of approximately $6.3 million and $1.3 million, respectively. Default penalties related to the notes of approximately $2.9 million were not designated. In exchange, the Company issued to BD 1 2 unsecured convertible notes with an aggregate principal amount of $3,504,199.
NOTE 11. DERIVATIVE LIABILITIES
The following table is a summary of the derivative liability activity for the six months ended June 30, 2021:
Derivative Liability Balance as of December 31, 2020 |
| $ | 5,303,984 |
|
Liability extinguished |
|
| (5,303,984 | ) |
Derivative Liability Balance as of June 30, 2021 |
| $ | — |
|
10
Convertible Notes Assigned to BD 1
The convertible notes that were assigned to BD 1 in September 2020, further described above in Note 10, were exchanged for new notes on December 18, 2020, as part of the Company’s recapitalization and restructuring effort which began in June 2020. Prior to the issuance, the holder together with its affiliates would beneficially own in excess of 9.9% of the outstanding shares of Common Stock.
At December 31, 2019, the aggregate derivative liability associated with these notes was $5,706,175. This value was derived from Management’s fair value assessment using the following assumptions: annual volatility range of 63%42% to 46%, present value discount rate of 12%, and a dividend yield of 0%.
In 2020, pursuant to ASC Topic 815, Derivatives and Hedging, Management conducted quarterly fair value assessments of Unsecured, Non-Convertible Notes
Convertible Notes held by Global Ichiban
In connection with the convertible notes held by Global, further described above in Note 8, pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging, the conversion options in the notes were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. The fair value measurements rely primarily on Company-specific inputs and the Company’s own assumptions. With the absence of observable inputs, the Company determined these recurring fair value measurements reside primarily within Level 3 of the fair value hierarchy. The derivative associated with the notes approximates management’s estimate of the fair value of the embedded derivative liability based on using a Monte Carlo simulation following a Geometric Brownian Motion with the following assumptions identified below.
At December 31, 2019, the aggregate derivative liability associated with these notes was $2,010,975. This value was derived from Management’s fair value assessment using the following assumptions: annual volatility of 46%, present value discount rate of $30,000 which12%, and a dividend yield of 0%.
The conversion option in the GI Exchange Note was deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance based on the following assumptions: annual volatility of 49%, expected interest rate of 1.52%, and a dividend yield of 0%, and appropriately recorded that value as a derivative liability. At September 9, 2020, the derivative liability associated with the Global note was $447,903. The fair value of the derivative was recorded as a debt discount and will be charged to interest expense ratably over the termlife of the note.
The note bears interest at 12% per annum and matures on July 17, 2017. Principal and interest on this note are payable at maturity. Thisderivative liability associated with the note is not convertible into equity sharessubject to revaluation on a quarterly basis to reflect the market value change of the Companyembedded conversion option. Management assessed the fair value option of this embedded derivative, as of December 31, 2020, using the following assumptions: annual volatility of 62%, and is unsecured.
11
On March 9, 2021, the Company entered into a settlement agreement with Global, further described above in Note 8. As a result of the settlement, the entire debt was cancelled and the private investor agreedCompany recorded an aggregate net gain of $5,303,984 for the three months ended March 31, 2021, as “Change in fair value of derivatives and gain/loss on extinguishment of liabilities, net” in the Condensed Consolidated Statement of Operations to a 12 month payment plan onproperly reflect that the balancevalue of this promissory note. Interest will continue to accrue on this note at 12% per annum and payments of approximately $62,000 will be made monthly beginning in July 2017.
NOTE 10.12. SERIES A PREFERRED STOCK
In June 2013, the Company entered into a Securities Purchase Agreement with an investor to sell an aggregate of 750,000$750,000 shares of Series A Preferred Stock at a price of $8.00 per share, resulting in gross proceeds of $6,000,000.$6.0 million. 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.$1.0 million. 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.
Holders of Series A Preferred Stock are entitled to cumulative dividends at a rate of 8% per annum when and if declared by the Board of Directors in its sole discretion. The dividends may be paid in cash or in the form of common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period), at the discretion of the Board of Directors. The dividend rate on the Series A Preferred Stock is indexed to the Company's stock price and subject to adjustment. In addition, the Series A Preferred Stock contains a make-whole provision whereby, conversion or redemption of the preferred stock within 4 years of issuance will require dividends for the full four year period to be paid by the Company in cash or common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period).
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 adjusted, for 20twenty 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 per share, plus any accrued and unpaid dividends, plus the make-whole amount (if applicable). At SeptemberJune 30, 2017,2021, 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 1 preferred share into 1 common share (subject to standard ratable anti-dilution adjustments). 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.
On October 6, 2016, the Series A Holder entered into an exchange agreement (the “Exchange Agreement”) with Adar Bays.a private investor. Pursuant to the exchange agreement, beginning December 5, 2016, Adar Baysthe investor has the option to exchange, from time to time, all or any portion of the October 2016 Convertible Notes (see Note 17)11) for outstanding shares of Series A Preferred Stock from the Series A Holder.
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 SeptemberJune 30, 2017,2021, there were 60,75648,100 shares of Series A Preferred Stock outstanding.
NOTE 11.13. SERIES E1A PREFERRED STOCK AND THE COMMITTED EQUITY LINE
Series E1A Preferred Stock
On November 4, 2015,September 22, 2020, the Company entered into a securities purchase agreement (“Series 1A SPA”) 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 |
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Each share of Series F1A Preferred Stock to the private investor. The aggregate purchasehas an original issue price of the Series F Preferred shares was $7,000,000. On January 20, 2016, the private investor paid $500,000 to the Company. The remaining $6,500,000 was paid by the private investor to the Company in 14 weekly increments of $500,000 or $250,000 beginning January 25, 2016 and ending April 28, 2016.
Outstanding shares of Series F Preferred Stock (including any accrued and unpaid dividends thereon). If the redemption price is paid by the Company in cash, the number of shares to be redeemed in each weekly increment is 250 shares of Series F Preferred Stock, and the redemption price is a price per share equal to $1,250 plus any accrued but unpaid dividends thereon.
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 |
Holders of the Series G Preferred Stock will be entitled to dividends in the amount of 10% per annum. One year after issuance, the Company is required to redeem for cash all or any portion of the outstanding shares of the Series G Preferred Stock at a price per share equal to $1,000 plus any accrued but unpaid dividends thereon.
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 |
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 |
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 |
The Company sold 2,000 shares of Series 1A Preferred Stock to Crowdex in accordance with ASC 480-10,exchange for $2,000,000 of gross proceeds at an initial closing under the Series K1A SPA on September 22, 2020.
In November 2020, Crowdex converted 1,200 shares of outstanding Series 1A Preferred Stock was classified as a liability oninto 12,000,000,000 shares of Common Stock.
On December 31, 2020 the Consolidated Balance Sheets. Pursuant to a numberCompany sold 500 shares of factors outlined in ASC Topic 815, the conversion option in the Series K1A Preferred Stock was deemed to not require bifurcation or separate accounting treatment.
On September 8, 2017,January 4, 2021, the Company entered into a securities purchase agreement (“Series 1ATranche 2 SPA”) with St. George Investments LLCTubeSolar AG, a developer of photovoltaic thin-film tubes to enable additional application opportunities in solar power generation compared to conventional solar modules (“Investor”TubeSolar”), for. Pursuant to the private placement of $1,725,000 principal amount of the Company’s Original Issue Discount Convertible Promissory Notes.
NOTE 14. STOCKHOLDERS’ EQUITY (DEFICIT)
Common Stock at a fixed conversion price of $0.004 per share.
At closing, a derivative liability and a corresponding debt discount in the amount of $468,095 was recorded.
Preferred Stock
At SeptemberJune 30, 2017,2021, the Company had 25,000,000 shares of preferred stock, $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.
13
The following table summarizes the designations, shares authorized, and shares outstanding for the Company's Preferred Stock:
Preferred Stock Series Designation |
| Shares Authorized |
|
| Shares Outstanding |
| ||
Series A |
|
| 750,000 |
|
|
| 48,100 |
|
Series 1A |
|
| 5,000 |
|
|
| 3,800 |
|
Series B-1 |
|
| 2,000 |
|
|
| 0 |
|
Series B-2 |
|
| 1,000 |
|
|
| 0 |
|
Series C |
|
| 1,000 |
|
|
| 0 |
|
Series D |
|
| 3,000 |
|
|
| 0 |
|
Series D-1 |
|
| 2,500 |
|
|
| 0 |
|
Series E |
|
| 2,800 |
|
|
| 0 |
|
Series F |
|
| 7,000 |
|
|
| 0 |
|
Series G |
|
| 2,000 |
|
|
| 0 |
|
Series H |
|
| 2,500 |
|
|
| 0 |
|
Series I |
|
| 1,000 |
|
|
| 0 |
|
Series J |
|
| 1,350 |
|
|
| 0 |
|
Series J-1 |
|
| 1,000 |
|
|
| 0 |
|
Series K |
|
| 20,000 |
|
|
| 0 |
|
Series A Preferred Stock
Series F1A Preferred Stock
Series B-1, B-2, C, D, D-1, E, F, G, H, I, J, Preferred Stock.
There were no transactions involving the Series B-1, B-2, C, D, D-1, E, F, G, H, I, J, J-1, or K during the three and six months ended June 30, 2021 and 2020.
NOTE 15. PAYCHECK PROTECTION PROGRAM LOAN
On April 17, 2020, the Company obtained a PPP Loan from Vectra Bank Colorado (“Vectra”) in the aggregate amount of $193,200, which was established under the CARES Act, as administered by the Small Business Administration (“SBA”). Under the terms of the CARES Act and the PPP, all or a portion of the principal amount of the PPP Loan is subject to
The terms of the PPP loan provide for customary events of default including, among other things, payment defaults, breach of representations and warranties, and insolvency events.
The Company has applied for forgiveness of the PPP Loan in the third quarter of 2021 and is awaiting determination.
The PPP Loan is subject to any new guidance and new requirements released by the Department of the Treasury.
At June 30, 2021 the total outstanding balance of the PPP Loan was $193,200.
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NOTE 16. SUBSEQUENT EVENTS
Series K1A Preferred Stock.
On July 24, 2017, the Company issued a warrant for 250 million shares of common stock, in connection with a settlement agreement with a consultant. The warrant is exerciseable at a fixed exercise price of $0.004, on the issuance date through the first anniversary of the issuance date. The warrant may not be exercised if, after giving effect to the exercise, the holder, together with its affiliates, would beneficially own in excess of 9.99% of the Company's15, 2021, TubeSolar converted 60 outstanding shares of common stock.
Common Stock Purchase Agreement
On August 10, 2017, the Company issued a warrant for 250 million shares of common stock in connection with a preferred stock redemption agreement. The warrant is exerciseable, at a fixed exercise price of $0.003, on the issuance date through the first anniversary of the issuance date. The Warrant may not be exercised if, after giving effect to the exercise, the holder, together with its affiliates, would beneficially own in excess of 9.99% of the Company's outstanding shares of common 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 |
15
Note. 8. The note matured on October 23, 2017 and was due and payable asTable 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.
Item 2. Management'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, 2020, which was filed with the SEC on May 13, 2021. 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 are a company formed to commercialize flexible photovoltaicPV modules using our proprietary technology. For the three and
In 2012, we transitioned our business model addingJanuary 2017, Ascent was awarded a second business focused on developingcontract to supply high-voltage SuperLight thin-film CIGS PV integrated consumer electronics. In June of 2012, we launched ourblankets. These 50W, fully laminated, flexible blankets were manufactured using a new line of consumer products underprocess that was optimized for high performance in near-space conditions at elevated temperatures, and are custom designed for easy modular integration into series and parallel configurations to achieve the EnerPlex™ brand,desired voltage and introduced our first product, the Surfr™ battery and a solar casecurrent required for the Apple® iPhone® 4/4S smart phone featuring our ultra-light CIGS thin film technology integrated directly into the case. The case incorporates our ultra-light and thin PV module into a sleek, protective iPhone 4/4S case, along with a thin, life extending, battery. The charger adds minimal weight and bulk to the iPhone, yet provides supplemental charging when needed.
In February 2017 Ascent announced the salediscontinuation of our EnerPlex consumer business by disposing of the EnerPlex brand, and related intellectual properties and trademarks, associated with EnerPlex to our battery product supplier, Sun Pleasure Co. Limited (“SPCL”). This transaction was completed in an effort to better allocate itsour resources and to continue to focus on itsour core strength in the high-value specialty PV market. Following the transfer, Ascent will no longer produceproduces or sellsells Enerplex-branded consumer products. In November 2017, Ascent will also supplyintroduced the next generation of our USB-based portable power systems with the XD™ series. The first product introduced was the XD-12 which, like previous products, is a folding, lightweight, easily stowable, PV system with USB power regulation. Unique to this generation of PV portable power is more PV power (12 Watts) and a 2.0 Amp smart USB output to enable the XD-12 to charge most smartphones, tablets, and USB-enabled devices as fast as a wall outlet. The enhanced smart USB circuit works with the device to be charged so that the device can determine the maximum power it is able to receive from the XD-12 and ensures the best possible charging performance directly from the sun.
Also, in 2017, for a space customer, Ascent manufactured a new micro-module, approximately 12.8mm x 50mm (0.5in x 2.0in) in size that is ideal for both laboratory-scale environmental testing, and for subsequent integration into flight experiments.
In February 2018, the Company introduced the second product in our XD series. Delivering up to 48 Watts of solar PV productspower, the durable and compact Ascent XD-48 Solar Charger is the ideal solution for charging many portable electronics and off-grid power systems. The XD-48’s versatility allows it to SPCL, supportingcharge both military and consumer electronics directly from the continuous growthsun wherever needed. Like the XD-12, the XD-48 has a compact and portable design, and its rugged, weather-resistant construction withstands shocks, drops, damage and even minor punctures to power through the harshest conditions.
In March 2018, Ascent successfully shipped to a European based customer for a lighter-than-air, helium-filled airship project based on our newly developed ultra-light modules with substrate material than half of EnerPlex™ with Ascent’s proprietarythe thickness of our standard modules. In 2019, Ascent completed a repeat order from the same customer who had since established its airship development operation in the US. In 2020, Ascent received a third and award-winning thin-film solar technologiesenlarged order from the same customer and products.
We continue to design and manufacture its own line of PV integrated consumer electronics, as well as portable power applications for commercial and military users. Due to the high durability enabled by the monolithic integration employed inby our technology, the capability to customize modules into different form factors and 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 focused on specialty solar applications which can fully leverage the unique propertiesextensive.
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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, providesAll tooling necessary for 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.
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:
• | Our ability to generate customer acceptance of and demand for our products; |
• | Successful ramping up of commercial production on the equipment installed; |
• | Our products are successfully and timely certified for use in our target markets; |
• | Successful operating of production tools to achieve the efficiencies, throughput and yield necessary to reach our cost targets; |
• | The products we design are saleable at a price sufficient to generate profits; |
• | Our ability to raise sufficient capital to enable us to reach a level of sales sufficient to achieve profitability on terms favorable to us; |
• | Effective management of the planned ramp up of our domestic and international operations; |
• | Our ability to successfully develop and maintain strategic relationships with key partners, including OEMs, system integrators, distributors, retailers and e-commerce companies, who deal directly with end users in our target markets; |
• | Our ability to maintain the listing of our common stock on the OTC Market; |
• | Our ability to implement remediation measures to address material weaknesses in internal control; |
• | Our ability to achieve projected operational performance and cost metrics; |
• | Our ability to enter into commercially viable licensing, joint venture, or other commercial arrangements; |
• | Availability of raw materials; and |
• | COVID-19 and the uncertainty around the continued duration and effect of the worldwide pandemic. |
Basis of Presentation: The accompanying unaudited condensed consolidated financial statements have been derived from the accounting records of Ascent Solar Technologies, Inc. and demandAscent Solar (Asia) Pte. Ltd. (collectively, the “Company") as of June 30, 2021 and December 31, 2020, and the results of operations for our products;
17
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, 2016.2020. There have been no significant changes to our accounting policies as of SeptemberJune 30, 2017.
Results of Operations
Comparison of the Three Months Ended SeptemberJune 30, 20172021 and 2016
Revenues.
OurCost of revenues.
Our Cost of revenues for the three months endedResearch, development and manufacturing operations.
Research, development and manufacturing operations costs wereSelling,
general and administrative. Selling, general and administrative expenses wereOther Income/Expense.Other income / expense, net.
Net Loss.
Our Net Loss was18
The decreaseincrease of $335,978 in Net Loss for the three months ended SeptemberJune 30, 20172021 can be summarized in variances in significant account activity as follows:
Decrease (Increase) to Net Loss For the Three Months Ended June 30, 2021 Compared to the Three Months Ended June 30, 2020 | ||||
Revenues | 330,426 | |||
Cost of Revenue | (400,938 | ) | ||
Research, development and manufacturing operations | (725,783 | ) | ||
Selling, general and administrative expenses | (680,546 | ) | ||
Depreciation and Amortization Expense | 43,325 | |||
Other Income / Expense | ||||
Other income/(expense), net | — | |||
Interest Expense | 863,302 | |||
Non-Cash Change in Fair Value of Derivatives and Gain/Loss on Extinguishment of Liabilities, net | 234,236 | |||
Decrease (Increase) to Net Loss | (335,978 | ) |
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 |
Comparison of the NineSix Months Ended SeptemberJune 30, 20172021 and 2016
Revenues.
OurCost of revenues.
Our Cost of revenues for theResearch, development and manufacturing operations.
Research, development and manufacturing operations costs wereSelling,
general and administrative. Selling, general and administrative expenses wereOther Income/Expense. Other income was $3,121,390 for the six months ended June 30, 2021, compared to other income of $5,713,284 for the six months ended June 30, 2020, a decrease of $4,008,000.$2,591,894. The following factors contributeddecrease is due primarily to the decreasechange in selling, general, and administrative expenses duringfair value of derivative liabilities.
Net Income. Our Net Income was $153,445 for the ninesix months ended SeptemberJune 30, 2017:
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The decrease of $4,881,787 for the ninesix months ended SeptemberJune 30, 20172021 can be summarized in variances in significant account activity as follows:
Increase (Decrease) to Net Income For the Six Months Ended June 30, 2021 Compared to the Six Months Ended June 30, 2020 | ||||
Revenues | 491,494 | |||
Cost of Revenue | (401,015 | ) | ||
Research, development and manufacturing operations | (1,294,354 | ) | ||
Selling, general and administrative expenses | (1,172,733 | ) | ||
Depreciation and Amortization Expense | 86,715 | |||
Other Income / Expense | ||||
Other income/(expense), net | (258,800 | ) | ||
Interest Expense | 1,531,916 | |||
Non-Cash Change in Fair Value of Derivatives and Gain/Loss on Extinguishment of Liabilities, net | (3,865,010 | ) | ||
Increase (Decrease) to Net Income | (4,881,787 | ) |
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
The Company has continued limited PV production at ourits manufacturing facility. We doThe Company does not expect that sales revenue and cash flows will be sufficient to support operations and cash requirements until it has fully implemented its new specialty PVproduct strategy. During the ninesix months ended SeptemberJune 30, 2017, we2021 the Company used $10.7 million$4,213,354 in cash for operations. Our 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 $0.2 million, including principal and interest, will come due in the remainder of 2017.
Additional projected product revenues are not anticipated to result in a positive cash flow position for the year 2017 overall and, as of SeptemberJune 30, 2017, we have negative2021, the Company has a deficit in working capital.capital of $780,902. As such, cash liquidity would not be sufficient for the year ending December 31, 2017next twelve months and will require additional financing.
The Company continues to accelerate sales and marketing efforts related to its certain consumer products, military solar products and specialty PV application strategies through expansion of ourits sales and distribution channels. We haveThe Company has begun activities related to securing additional financing through strategic or financial investors, but there is no assurance wethe Company will be able 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 condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.
Statements of Cash Flows Comparison of the NineSix Months Ended SeptemberJune 30, 2017 2021and 2016
For the ninesix months ended SeptemberJune 30, 2017,2021, our cash used in operations was $10.7 million$4,213,354 compared to $13.6 million$377,771 for the ninesix months ended SeptemberJune 30, 2016, a decrease2020, an increase of $2.8 million.$3,835,583. The decreaseincrease is primarily due to the reductionresult of headcount and production, coupled withscaling up operations during the transition out of certain consumer electronics marketscurrent period and the sale ofCompany’s dormant status in the EnerPlex brand.2020 six months period. For the ninesix months ended SeptemberJune 30, 2017, our2021, cash used in investing activities was $96,738 compared to cash provided by investing activities of $254,444 for the six months ended June 30, 2020. This change was $92.7 thousand as compared to our cash used in operations of $192.3 thousand, an increase of $285.0 thousand. This increase isprimarily the result of investinga decrease in intellectual property ("IP") duringproceeds from the first quartersale of 2016 and the sales of the EnerPlex brand IP during the first quarter of 2017.assets. During the ninesix months ended SeptemberJune 30, 2017,2021, negative operating cash flows of $10.7 million$4,213,354 were funded through $11.6 million$5,500,000 in proceeds from issuances of funding received from promissory notes,preferred and the usecommon stock.
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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 SeptemberJune 30, 2017 and December 31, 2016,2021, we did not have any off 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 requirement 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
We hold no significant funds and have purchased manufacturing equipment internationally, which exposes us tono future obligations denominated in foreign currency 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.
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 SeptemberJune 30, 2017,2021, 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 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 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 SeptemberJune 30, 2017.2021. 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.
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Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in 2016Rules 13a-15(f) and 2017
• | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; |
• | provide reasonable assurance transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and |
• | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. |
Under the supervision of the Audit Committee of the Board of Directors and with the participation of our management, concluded thatincluding our Chief Executive Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting using the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, our management concluded our internal controls over financial reporting were effective as of December 31, 2016 and SeptemberJune 30, 2017, was2021. Our management reviewed the results of its assessment with the Audit Committee.
Because of its inherent limitations, internal control over financial reporting may not effective dueprevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the material weaknesses described as follows:
A material weakness is a deficiency, arose primarily from staff turnover including the Company’s failure to more quickly replace its Directoror combination of Financial Planning and Reporting, who left the Company for a new positiondeficiencies, in November, 2016.
Material Weakness
As disclosed in material misstatements in the preliminary consolidated financial statements that were corrected prior to the issuanceItem 9A, “Controls and Procedures,” of the consolidated financial statements as of andCompany’s Annual Report on Form 10-K for the fiscal year ended December 31, 20162020, management concluded that a material weakness existed in its internal control over financial reporting as it related to the lack of accounting resourcing with technical expertise to ensure that all Company transactions were accounted for in accordance with U.S. GAAP. Specifically, the Company’s controls to ensure that appropriate accounting for the Company’s inventory and management doescost of revenue and the Company’s accounting for complex debt and equity securities transactions were not believe enough time has passeddesigned at a sufficient level of precision to determinemitigate the effectivenessrisk of our remediation plan.
Remediation Plan for Material Weaknesses in Internal Control over Financial Reporting
The Company’s financial challenges faced in 2020 subsided as cash flow improved during the six months ended June 30, 2021, and the Company received funding during the second half of 2020 and first quarter of 2021 and began to bring the Company back into operating status. The Company has executed the following steps in 2017 to remediate the aforementioned material weaknesses in its internal control over financial reporting:
• | The Company hired a new Chief Financial Officer during the fourth quarter of 2020 and a new Controller with a strong financial statement audit and technical accounting background during the second quarter of 2021. The Company’s Controller, acting in coordination with the Company’s CFO, were both highly involved in implementing and monitoring internal controls over the Company’s quarterly financial reporting including the oversight of controls specifically related to the Company’s inventory activities, cost of revenue allocations, and accounting for the Company’s debt and equity securities, supervising the accounting staff involved in the Company’s quarterly financial reporting, and identifying, monitoring, and resolving accounting issues as raised throughout the Company’s ongoing activities. |
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• | The Company significantly reduced the complexity of the debt structure through consolidation and simplifying of terms thereby lowering the associated administration and cost burden. |
• | The Company engaged an external resource with the technical expertise to assist in documenting and testing internal controls under Section 302 and 404 of the Sarbanes Oxley Act of 2002. |
The substantial elimination of the Company hired a Director of Financial Planningcomplexities in the Company’s debt and Reportingsecurities accounting along with the technical expertise to researchabove changes in internal controls over financial reporting during the three and account for the Company's complex capital raising and financial transactions. In addition, the Company will be evaluating its personnel needs and other resources to ensure appropriate staffing and enhance its research and technical accounting knowledge base.
Changes in Internal Control Over Financial Reporting
Except for the identification and mitigation of the material weaknesses noted above, there were no other changes in internal control over financial reporting during the ninesix months ended SeptemberJune 30, 20172021 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
The COVID-19 pandemic in the United States and world-wide has caused business disruption which may negatively impact the Company’s operations and results. While the disruption is currently expected to be temporary, there is considerable uncertainty around the duration. It is therefore likely there will be an impact on the Company’s operating activities and results. However, the related financial impact and duration cannot be reasonably estimated at this time.
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, 2020. There have been no material changes to our risk factors from those included in our Annual Report on Form 10-K filed on April 17, 2017, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K filed on April 17, 2017 are notfor the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Not required.
Use of Proceeds
Not required.
Issuer Purchases of Equity Securities
We did not repurchase any of our equity securities during the six months ended June 30, 2021.
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 | ||
4.1 | ||
4.2 |
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Table of exhibits is found on page 47Contents
4.3 | ||
10.1 | ||
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 |
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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
ASCENT SOLAR TECHNOLOGIES, INC. | |||
August 6, 2021 | By: | / | |
Lee Kong Hian (aka Victor Lee) President and Chief Executive Officer (Principal Executive |
Officer) | ||
August 6, 2021 | By: | /s/ MICHAEL J. GILBRETH |
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