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 September 30, 20222023
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: 720-872-5000720-872-5000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of exchange on which registered |
Common | ASTI | Nasdaq Capital Markets |
Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐
Indicate by check mark whether the registrant has submitted every Interactive Data File required to be submitted 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). ☒Yes☐ No
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, 2022,14, 2023, there were 33,930,8123,406,723 shares of our common stock issued and outstanding.
ASCENT SOLAR TECHNOLOGIES, INC.
Quarterly Report on Form 10-Q
For the Period Ended September 30, 20222023
Table of Contents
Item 1. | 1 | |
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3 | ||
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Notes to the Unaudited Condensed | 6 | |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes “forward-looking statements” that involve risks and uncertainties. Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future net sales or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, business trends and other information that is not historical information and, in particular, appear under headings including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Overview.” When used in this Quarterly Report, the words “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “forecasts,” “foresees,” “likely,” “may,” “should,” “goal,” “target,” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements are based upon information available to us on the date of this Quarterly Report.
These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of our control, that could cause actual results to differ materially from the results discussed in the forward-looking statements, including, among other things, the matters discussed in this Quarterly Report in the sections captioned “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Factors you should consider that could cause these differences are:
• 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; • 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 Nasdaq Capital Market. • The commencement, or outcome, of legal proceedings against us, or by us, including ongoing litigation 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 photovoltaic modules and processes; • Our ability to maintain effective internal controls over financial reporting; • Our ability to achieve projected operational performance and cost metrics; • General economic and business conditions, and in particular, conditions specific to the solar power industry; • The impact of the novel coronavirus (“COVID-19”) pandemic on our business, results of operations, cash flows, financial condition and liquidity; 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, 2022.
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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)
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| September 30, |
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| December 31, |
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| September 30, |
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| December 31, |
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| 2022 |
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| 2021 |
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| 2023 |
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| 2022 |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
| $ | 2,850,271 |
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| $ | 5,961,760 |
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| $ | 2,249,764 |
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| $ | 11,483,018 |
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Trade receivables, net of allowance of $26,000 and $26,000, respectively |
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| 112,000 |
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| 49,250 |
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Trade receivables, net of allowance of $0 and $26,000, respectively |
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| - |
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| 1,769 |
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Inventories, net |
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| 684,385 |
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| 592,172 |
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| 636,019 |
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| 615,283 |
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Prepaid and other current assets |
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| 875,041 |
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| 247,736 |
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| 258,691 |
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| 344,110 |
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Total current assets |
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| 4,521,697 |
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| 6,850,918 |
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| 3,144,474 |
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| 12,444,180 |
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Property, Plant and Equipment: |
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| 22,558,389 |
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| 22,425,935 |
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| 24,182,295 |
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| 22,590,169 |
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Accumulated depreciation |
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| (22,022,653 | ) |
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| (22,146,273 | ) |
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| (20,125,328 | ) |
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| (22,038,508 | ) |
Property, Plant and Equipment, net |
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| 535,736 |
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| 279,662 |
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| 4,056,967 |
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| 551,661 |
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Other Assets: |
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Operating lease right-of-use assets, net |
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| 4,489,930 |
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| 4,984,688 |
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| 2,476,958 |
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| 4,324,514 |
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Patents, net of accumulated amortization of $149,426 and $135,050 respectively |
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| 80,223 |
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| 86,595 |
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Patents, net of accumulated amortization of $168,595 and $154,218 |
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| 84,925 |
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| 79,983 |
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Equity method investment |
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| 61,254 |
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| 21,205 |
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| 65,779 |
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| 61,379 |
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Other non-current assets |
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| 625,000 |
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| 625,000 |
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| 1,327,543 |
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| 1,214,985 |
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| 3,955,205 |
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| 5,680,861 |
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Total Assets |
| $ | 10,313,840 |
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| $ | 12,848,068 |
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| $ | 11,156,646 |
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| $ | 18,676,702 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |
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Current Liabilities: |
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Accounts payable |
| $ | 717,054 |
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| $ | 642,165 |
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| $ | 1,300,814 |
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| $ | 595,157 |
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Related party payables |
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| 42,666 |
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| 45,000 |
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| 27,885 |
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| 67,164 |
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Accrued expenses |
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| 2,341,667 |
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| 991,534 |
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| 984,568 |
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| 888,869 |
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Accrued payroll |
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| 585,774 |
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| 927,264 |
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Accrued professional services fees |
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| 791,679 |
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| 952,573 |
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Accrued interest |
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| 521,496 |
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| 475,671 |
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| 668,495 |
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| 559,060 |
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Notes payable |
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| 250,000 |
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| 250,000 |
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Current portion of operating lease liability |
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| 708,762 |
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| 646,742 |
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| 471,497 |
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| 733,572 |
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Conversions payable (Note 11) |
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| 6,470,540 |
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| - |
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Current portion of convertible notes, net |
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| 319,541 |
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| - |
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Other payable |
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| 250,000 |
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| 250,000 |
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Total current liabilities |
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| 4,581,645 |
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| 3,051,112 |
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| 11,870,793 |
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| 4,973,659 |
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Long-Term Liabilities: |
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Non-current operating lease liabilities |
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| 4,004,667 |
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| 4,532,490 |
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| 2,171,440 |
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| 3,827,878 |
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Non-current convertible notes, net |
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| - |
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| 8,076,847 |
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| - |
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| 5,268,399 |
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Accrued warranty liability |
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| 21,225 |
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| 21,225 |
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| 21,225 |
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| 21,225 |
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Total liabilities |
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| 8,607,537 |
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| 15,681,674 |
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| 14,063,458 |
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| 14,091,161 |
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Commitments and contingencies (Note 16) |
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Stockholders’ Equity (Deficit): |
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Series A preferred stock, $.0001 par value; 750,000 shares authorized; 48,100 and 48,100 shares issued and outstanding, respectively ($838,009 and $801,533 Liquidation Preference, respectively) |
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| 5 |
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| 5 |
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Common stock, $0.0001 par value, 500,000,000 authorized; 33,930,812 and 4,786,804 shares issued and outstanding, respectively |
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| 3,393 |
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| 479 |
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Series A preferred stock, $.0001 par value; 750,000 shares authorized; 48,100 |
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| 5 |
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| 5 |
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Common stock, $0.0001 par value, 500,000,000 authorized; 549,199 |
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| 55 |
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| 26 |
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Additional paid in capital |
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| 444,022,317 |
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| 424,948,698 |
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| 468,075,287 |
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| 452,139,027 |
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Accumulated deficit |
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| (442,303,388 | ) |
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| (427,782,788 | ) |
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| (470,987,945 | ) |
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| (447,537,493 | ) |
Accumulated other comprehensive loss |
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| (16,024 | ) |
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| - |
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| 5,786 |
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| (16,024 | ) |
Total stockholders’ equity (deficit) |
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| 1,706,303 |
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| (2,833,606 | ) |
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| (2,906,812 | ) |
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| 4,585,541 |
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Total Liabilities and Stockholders’ Equity (Deficit) |
| $ | 10,313,840 |
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| $ | 12,848,068 |
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| $ | 11,156,646 |
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| $ | 18,676,702 |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
ASCENT SOLAR TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(unaudited)
| Three Months Ended September 30, |
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| Nine Months Ended September 30, |
| Three Months Ended |
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| Nine Months Ended |
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| 2022 |
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| 2021 |
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| 2022 |
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| 2021 |
| 2023 |
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| 2022 |
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| 2023 |
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| 2022 |
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Revenues |
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Products | $ | 6,344 |
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| $ | 11,723 |
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| $ | 688,125 |
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| $ | 557,369 |
| $ | 209,496 |
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| $ | 6,344 |
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| $ | 395,106 |
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| $ | 688,125 |
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Milestone and engineering |
| - |
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| - |
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| 522,000 |
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| - |
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| 20,458 |
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| - |
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| 60,374 |
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| 522,000 |
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Total Revenues |
| 6,344 |
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| 11,723 |
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| 1,210,125 |
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| 557,369 |
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| 229,954 |
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| 6,344 |
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| 455,480 |
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| 1,210,125 |
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Costs and Expenses |
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Costs of revenue |
| 409,819 |
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| 687,885 |
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| 1,519,703 |
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| 1,184,528 |
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| 692,752 |
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| 409,819 |
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| 1,820,816 |
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| 1,519,703 |
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Research, development and manufacturing operations |
| 1,540,170 |
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| 1,086,513 |
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| 4,399,765 |
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| 2,716,395 |
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| 344,942 |
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| 1,540,170 |
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| 2,832,956 |
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| 4,399,765 |
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Selling, general and administrative |
| 1,890,218 |
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| 882,641 |
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| 3,583,366 |
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| 2,244,771 |
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| 1,407,493 |
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| 1,890,218 |
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| 4,178,146 |
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| 3,583,366 |
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Share-based compensation |
| 3,796,151 |
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| - |
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| 3,796,151 |
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| - |
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| 139,067 |
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| 3,796,151 |
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| 2,104,378 |
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| 3,796,151 |
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Depreciation and amortization |
| 20,497 |
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| 15,111 |
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| 54,998 |
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| 40,047 |
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| 23,723 |
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| 20,497 |
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| 73,947 |
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| 54,998 |
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Total Costs and Expenses |
| 7,656,855 |
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| 2,672,150 |
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| 13,353,983 |
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| 6,185,741 |
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| 2,607,977 |
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| 7,656,855 |
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| 11,010,243 |
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| 13,353,983 |
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Loss from Operations |
| (7,650,511 | ) |
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| (2,660,427 | ) |
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| (12,143,858 | ) |
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| (5,628,372 | ) |
| (2,378,023 | ) |
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| (7,650,511 | ) |
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| (10,554,763 | ) |
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| (12,143,858 | ) |
Other Income/(Expense) |
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Other income/(expense), net |
| 20,000 |
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| 67,644 |
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| 22,000 |
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| 68,443 |
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| 756,859 |
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| 20,000 |
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| 766,859 |
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| 22,000 |
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Interest expense |
| (252,571 | ) |
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| (167,983 | ) |
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| (2,371,256 | ) |
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| (899,533 | ) |
| (288,109 | ) |
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| (252,571 | ) |
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| (2,118,023 | ) |
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| (2,371,256 | ) | |
Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net |
| - |
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| 195,852 |
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| - |
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| 4,047,993 |
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Total Other Income/(Expense) |
| (232,571 | ) |
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| 95,513 |
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| (2,349,256 | ) |
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| 3,216,903 |
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| 468,750 |
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| (232,571 | ) |
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| (1,351,164 | ) |
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| (2,349,256 | ) |
Income/(Loss) on Equity Method Investments |
| (27,484 | ) |
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| - |
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| (27,486 | ) |
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| - |
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| (27,484 | ) |
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| (170 | ) |
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| (27,486 | ) |
Net Income/(Loss) | $ | (7,910,566 | ) |
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| $ | (2,564,914 | ) |
| $ | (14,520,600 | ) |
| $ | (2,411,469 | ) |
| (1,909,273 | ) |
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| (7,910,566 | ) |
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| (11,906,097 | ) |
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| (14,520,600 | ) |
Net Income/(Loss) Per Share (Basic and Diluted) | $ | (0.24 | ) |
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| $ | (0.67 | ) |
| $ | (0.51 | ) |
| $ | (0.65 | ) | $ | (4.04 | ) |
| $ | (47.71 | ) |
| $ | (66.40 | ) |
| $ | (101.70 | ) |
Weighted Average Common Shares Outstanding (Basic) |
| 33,159,093 |
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| 3,814,904 |
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| 28,555,408 |
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| 3,706,361 |
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| 473,159 |
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| 165,795 |
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| 354,830 |
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| 14,277 |
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Weighted Average Common Shares Outstanding (Diluted) |
| 33,159,093 |
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| 3,814,904 |
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| 28,555,408 |
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| 3,706,361 |
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| 473,159 |
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| 165,795 |
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| 354,830 |
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| 14,277 |
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Other Comprehensive Income/(Loss) |
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Foreign currency translation gain/(loss) |
| (2,671 | ) |
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| - |
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| (16,024 | ) |
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| - |
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| 19,940 |
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| (2,671 | ) |
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| 21,810 |
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| (16,024 | ) |
Net Comprehensive Income/(Loss) | $ | (7,913,237 | ) |
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| $ | (2,564,914 | ) |
| $ | (14,536,624 | ) |
| $ | (2,411,469 | ) | $ | (1,889,333 | ) |
| $ | (7,913,237 | ) |
| $ | (11,884,287 | ) |
| $ | (14,536,624 | ) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
ASCENT SOLAR TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
(unaudited)
For the Three and Nine Months Ended September 30, 20222023
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| Series A Preferred Stock |
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| Series 1A Preferred Stock |
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| Common Stock |
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| Additional Paid-In |
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| Accumulated |
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| Other Accumulated Comprehensive |
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| Total Stockholders’ Equity |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Capital |
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| Deficit |
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| Loss |
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| (Deficit) |
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Balance at January 1, 2022 |
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| 48,100 |
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| $ | 5 |
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|
| 3,700 |
|
| $ | - |
|
|
| 4,787,415 |
|
| $ | 479 |
|
| $ | 424,948,698 |
|
| $ | (427,782,788 | ) |
|
|
|
|
| $ | (2,833,606 | ) |
Conversion of TubeSolar Series 1A Preferred Stock into Common Stock |
|
| - |
|
|
| - |
|
|
| (2,400 | ) |
|
| - |
|
|
| 4,800,000 |
|
|
| 480 |
|
|
| (480 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
Conversion of Crowdex Series 1A Preferred Stock into Common Stock |
|
| - |
|
|
| - |
|
|
| (1,300 | ) |
|
| - |
|
|
| 2,600,000 |
|
|
| 260 |
|
|
| (260 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
Conversion of BD1 Note into Common Stock |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 15,800,000 |
|
|
| 1,580 |
|
|
| 7,898,420 |
|
|
| - |
|
|
| - |
|
|
| 7,900,000 |
|
Conversion of Nanyang Note into Common Stock |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,200,000 |
|
|
| 120 |
|
|
| 599,880 |
|
|
| - |
|
|
| - |
|
|
| 600,000 |
|
Conversion of Fleur Note into Common Stock |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,400,000 |
|
|
| 140 |
|
|
| 699,860 |
|
|
| - |
|
|
| - |
|
|
| 700,000 |
|
Net Loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (6,610,034 | ) |
|
| - |
|
|
| (6,610,034 | ) |
Foreign Currency Translation Loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (13,353 | ) |
|
| (13,353 | ) |
Balance at June 30, 2022 |
|
| 48,100 |
|
| $ | 5 |
|
|
| - |
|
| $ | - |
|
|
| 30,587,415 |
|
| $ | 3,059 |
|
| $ | 434,146,118 |
|
| $ | (434,392,822 | ) |
| $ | (13,353 | ) |
| $ | (256,993 | ) |
Conversion of Nanyang Note into Common Stock |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,800,000 |
|
|
| 180 |
|
|
| 899,820 |
|
|
| - |
|
|
| - |
|
|
| 900,000 |
|
Conversion of Fleur Note into Common Stock |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 600,000 |
|
|
| 60 |
|
|
| 299,940 |
|
|
| - |
|
|
| - |
|
|
| 300,000 |
|
Proceeds from private placement: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
Common stock (8/19 @ $2.70) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 943,397 |
|
|
| 94 |
|
|
| 2,551,311 |
|
|
| - |
|
|
| - |
|
|
| 2,551,405 |
|
Warrants (8/19 @ $1.73) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,448,595 |
|
|
| - |
|
|
| - |
|
|
| 2,448,595 |
|
Private placement costs |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (119,617 | ) |
|
| - |
|
|
| - |
|
|
| (119,617 | ) |
Share-based compensation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,796,150 |
|
|
| - |
|
|
| - |
|
|
| 3,796,150 |
|
Net Loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (7,910,566 | ) |
|
| - |
|
|
| (7,910,566 | ) |
Foreign Currency Translation Loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (2,671 | ) |
|
| (2,671 | ) |
Balance at September 30, 2022 |
|
| 48,100 |
|
| $ | 5 |
|
|
| - |
|
| $ | - |
|
|
| 33,930,812 |
|
| $ | 3,393 |
|
| $ | 444,022,317 |
|
| $ | (442,303,388 | ) |
| $ | (16,024 | ) |
| $ | 1,706,303 |
|
|
| Series A |
|
| Series 1B |
|
| Common Stock |
|
| Additional |
|
| Accumulated |
|
| Other Accumulated Comprehensive |
|
| Total |
| |||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Loss |
|
| (Deficit) |
| ||||||||||
Balance at January 1, 2023 |
|
| 48,100 |
|
| $ | 5 |
|
|
| - |
|
| $ | - |
|
|
| 259,323 |
|
| $ | 26 |
|
| $ | 452,139,027 |
|
| $ | (447,537,493 | ) |
| $ | (16,024 | ) |
| $ | 4,585,541 |
|
Impact of adopting ASU 2020-06 |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (3,795,874 | ) |
|
| 109,631 |
|
|
| - |
|
|
| (3,686,243 | ) |
Balance at January 1, 2023, as adjusted |
|
| 48,100 |
|
| $ | 5 |
|
|
| - |
|
| $ | - |
|
|
| 259,323 |
|
| $ | 26 |
|
| $ | 448,343,153 |
|
| $ | (447,427,862 | ) |
| $ | (16,024 | ) |
| $ | 899,298 |
|
Conversion of L1 Note |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 45,129 |
|
|
| 5 |
|
|
| 1,240,813 |
|
|
| - |
|
|
| - |
|
|
| 1,240,818 |
|
Conversion of Sabby Note into |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 63,030 |
|
|
| 6 |
|
|
| 2,123,643 |
|
|
| - |
|
|
| - |
|
|
| 2,123,649 |
|
Share-based compensation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,965,311 |
|
|
| - |
|
|
| - |
|
|
| 1,965,311 |
|
Common stock issued for services |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,425 |
|
|
| - |
|
|
| 92,750 |
|
|
| - |
|
|
| - |
|
|
| 92,750 |
|
Proceeds from issurance of |
|
| - |
|
|
| - |
|
|
| 900 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 900,000 |
|
|
| - |
|
|
| - |
|
|
| 900,000 |
|
Preferred Stock issuance cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (20,000 | ) |
|
|
|
|
|
|
|
| (20,000 | ) | ||||||||
Down round deemed dividend |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 11,653,986 |
|
|
| (11,653,986 | ) |
|
| - |
|
|
| - |
|
Net Loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (9,996,824 | ) |
|
| - |
|
|
| (9,996,824 | ) |
Foreign Currency Translation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,870 |
|
|
| 1,870 |
|
Balance at June 30, 2023 |
|
| 48,100 |
|
| $ | 5 |
|
|
| 900 |
|
| $ | - |
|
|
| 368,907 |
|
| $ | 37 |
|
| $ | 466,299,656 |
|
| $ | (469,078,672 | ) |
| $ | (14,154 | ) |
| $ | (2,793,128 | ) |
Conversion of L1 Note |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 106,250 |
|
|
| 11 |
|
|
| (603,668 | ) |
|
| - |
|
|
| - |
|
|
| (603,657 | ) |
Conversion of Sabby Note into |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 74,042 |
|
|
| 7 |
|
|
| 151,942 |
|
|
| - |
|
|
| - |
|
|
| 151,949 |
|
Prepayment of Common Stock |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,088,290 |
|
|
| - |
|
|
| - |
|
|
| 2,088,290 |
|
Share-based compensation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 139,067 |
|
|
| - |
|
|
| - |
|
|
| 139,067 |
|
Net Loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (1,909,273 | ) |
|
| - |
|
|
| (1,909,273 | ) |
Foreign Currency Translation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 19,940 |
|
|
| 19,940 |
|
Balance at September 30, 2023 |
|
| 48,100 |
|
| $ | 5 |
|
|
| 900 |
|
| $ | - |
|
|
| 549,199 |
|
| $ | 55 |
|
| $ | 468,075,287 |
|
| $ | (470,987,945 | ) |
| $ | 5,786 |
|
| $ | (2,906,812 | ) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
ASCENT SOLAR TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(unaudited)
For the Three and Nine Months Ended September 30, 20212022
|
| 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 at January 1, 2021 |
|
| 48,100 |
|
| $ | 5 |
|
|
| 1,300 |
|
| $ | - |
|
|
| 3,660,439 |
|
| $ | 366 |
|
| $ | 401,590,211 |
|
| $ | (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 |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,500 |
|
|
| 2 |
|
|
| 2,999,998 |
|
|
| - |
|
|
| 3,000,000 |
|
Conversion of Global Ichiban Note into Common Shares |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 33,600 |
|
|
| 3 |
|
|
| 5,799,997 |
|
|
| - |
|
|
| 5,800,000 |
|
Relieved on Conversion of Derivative Liability |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 1,686,079 |
|
|
| - |
|
|
| 1,686,079 |
|
Net Income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 153,445 |
|
|
| 153,445 |
|
Balance at June 30, 2021 |
|
| 48,100 |
|
| $ | 5 |
|
|
| 3,800 |
|
| $ | - |
|
|
| 3,695,539 |
|
| $ | 371 |
|
| $ | 414,576,285 |
|
| $ | (421,629,340 | ) |
| $ | (7,052,679 | ) |
Proceeds from issuance of Common Shares |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 66,667 |
|
|
| 67 |
|
|
| 4,999,933 |
|
|
| - |
|
|
| 5,000,000 |
|
Conversion of TubeSolar Series 1A Preferred Stock into Common Shares |
|
| - |
|
|
| - |
|
|
| (100 | ) |
|
| - |
|
|
| 200,000 |
|
|
| 200 |
|
|
| (200 | ) |
|
| - |
|
|
| - |
|
Net Loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (2,564,914 | ) |
|
| (2,564,914 | ) |
Balance at September 30, 2021 |
|
| 48,100 |
|
| $ | 5 |
|
|
| 3,700 |
|
| $ | - |
|
|
| 3,962,206 |
|
| $ | 638 |
|
| $ | 419,576,018 |
|
| $ | (424,194,254 | ) |
| $ | (4,617,593 | ) |
|
| Series A |
|
| Series 1A |
|
| Common Stock |
|
| Additional |
|
| Accumulated |
|
| Other Accumulated Comprehensive |
|
| Total |
| |||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Loss |
|
| (Deficit) |
| ||||||||||
Balance at January 1, 2022 |
|
| 48,100 |
|
| $ | 5 |
|
|
| 3,700 |
|
| $ | - |
|
|
| 113,256 |
|
| $ | 12 |
|
| $ | 424,949,165 |
|
| $ | (427,782,788 | ) |
| $ | - |
|
| $ | (2,833,606 | ) |
Conversion of TubeSolar Series 1A |
|
| - |
|
|
| - |
|
|
| (2,400 | ) |
|
| - |
|
|
| 24,000 |
|
|
| 2 |
|
|
| (2 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
Conversion of Crowdex Series 1A |
|
| - |
|
|
| - |
|
|
| (1,300 | ) |
|
| - |
|
|
| 13,000 |
|
|
| 1 |
|
|
| (1 | ) |
|
| - |
|
|
| - |
|
|
| - |
|
Conversion of BD1 Note |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 79,000 |
|
|
| 8 |
|
|
| 7,899,992 |
|
|
| - |
|
|
| - |
|
|
| 7,900,000 |
|
Conversion of Nanyang Note |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 6,000 |
|
|
| 1 |
|
|
| 599,999 |
|
|
| - |
|
|
| - |
|
|
| 600,000 |
|
Conversion of Fleur Note into |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 7,000 |
|
|
| 1 |
|
|
| 699,999 |
|
|
| - |
|
|
| - |
|
|
| 700,000 |
|
Net Loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (6,610,034 | ) |
|
| - |
|
|
| (6,610,034 | ) |
Foreign Currency Translation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (13,353 | ) |
|
| (13,353 | ) |
Balance at June 30, 2022 |
|
| 48,100 |
|
| $ | 5 |
|
|
| - |
|
| $ | - |
|
|
| 242,256 |
|
| $ | 25 |
|
| $ | 434,149,152 |
|
| $ | (434,392,822 | ) |
| $ | (13,353 | ) |
| $ | (256,993 | ) |
Conversion of Nanyang Note |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 9,000 |
|
|
| 1 |
|
|
| 899,999 |
|
|
| - |
|
|
| - |
|
|
| 900,000 |
|
Conversion of Fleur Note into |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,000 |
|
|
| - |
|
|
| 300,000 |
|
|
| - |
|
|
| - |
|
|
| 300,000 |
|
Proceeds from private placement: |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
| |
Common stock (8/19 @$540) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 4,717 |
|
|
| - |
|
|
| 2,551,405 |
|
|
| - |
|
|
| - |
|
|
| 2,551,405 |
|
Warrants (8/19 @ $346) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 2,448,595 |
|
|
| - |
|
|
| - |
|
|
| 2,448,595 |
|
Private placement costs |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (119,617 | ) |
|
| - |
|
|
| - |
|
|
| (119,617 | ) |
Share-based compensation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 3,796,150 |
|
|
| - |
|
|
| - |
|
|
| 3,796,150 |
|
Net Loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (7,910,566 | ) |
|
| - |
|
|
| (7,910,566 | ) |
Foreign Currency Translation |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (2,671 | ) |
|
| (2,671 | ) |
Balance at September 30, 2022 |
|
| 48,100 |
|
| $ | 5 |
|
|
| - |
|
| $ | - |
|
|
| 258,973 |
|
| $ | 26 |
|
| $ | 444,025,684 |
|
| $ | (442,303,388 | ) |
| $ | (16,024 | ) |
| $ | 1,706,303 |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
ASCENT SOLAR TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
|
| For the Nine Months Ended |
|
| For the Nine Months Ended |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2023 |
|
| 2022 |
| ||||
Operating Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Net income/(loss) |
| $ | (14,520,600 | ) |
| $ | (2,411,469 | ) |
| $ | (11,906,097 | ) |
| $ | (14,520,600 | ) |
Adjustments to reconcile net income (loss) to cash used in operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Depreciation and amortization |
|
| 54,998 |
|
|
| 40,047 |
|
|
| 73,947 |
|
|
| 54,998 |
|
Share-based compensation |
|
| 3,796,150 |
|
|
| — |
|
|
| 2,104,378 |
|
|
| 3,796,150 |
|
Services paid in common stock |
|
| 92,750 |
|
|
| — |
| ||||||||
Gain on lease modification |
|
| (84,678 | ) |
|
| — |
| ||||||||
Loss on disposal of assets |
|
| 77,210 |
|
|
| — |
| ||||||||
Operating lease asset amortization |
|
| 515,803 |
|
|
| 482,945 |
|
|
| 555,240 |
|
|
| 515,803 |
|
Amortization of debt discount |
|
| 2,323,153 |
|
|
| 837,767 |
|
|
| 1,773,621 |
|
|
| 2,323,153 |
|
Inventory reserve expense |
|
| 111,028 |
|
|
| — |
| ||||||||
Loss on equity method investment |
|
| 27,486 |
|
|
| — |
|
|
| 170 |
|
|
| 27,486 |
|
Warranty reserve |
|
| — |
|
|
| 7,082 |
| ||||||||
Change in fair value of derivatives and gain on extinguishment of liabilities, net |
|
| — |
|
|
| (4,047,993 | ) | ||||||||
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Accounts receivable |
|
| (62,750 | ) |
|
| 1,568 |
|
|
| 1,769 |
|
|
| (62,750 | ) |
Inventories |
|
| (92,213 | ) |
|
| (81,243 | ) |
|
| (131,764 | ) |
|
| (92,213 | ) |
Prepaid expenses and other current assets |
|
| (746,922 | ) |
|
| (243,155 | ) |
|
| (27,139 | ) |
|
| (746,922 | ) |
Accounts payable |
|
| 74,889 |
|
|
| (86,266 | ) |
|
| 705,657 |
|
|
| 74,889 |
|
Related party payable |
|
| (2,334 | ) |
|
| (90,834 | ) |
|
| (39,279 | ) |
|
| (2,334 | ) |
Operating lease liabilities |
|
| (486,848 | ) |
|
| (427,764 | ) |
|
| (541,519 | ) |
|
| (486,848 | ) |
Accrued interest |
|
| 45,825 |
|
|
| 44,461 |
|
|
| 109,435 |
|
|
| 45,825 |
|
Accrued expenses |
|
| 1,147,577 |
|
|
| (252,959 | ) |
|
| (204,127 | ) |
|
| 1,147,577 |
|
Net cash used in operating activities |
|
| (7,925,786 | ) |
|
| (6,227,813 | ) |
|
| (7,329,398 | ) |
|
| (7,925,786 | ) |
Investing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Contributions to equity method investment |
|
| (83,559 | ) |
|
| — |
|
|
| — |
|
|
| (83,559 | ) |
Payments on purchase of assets |
|
| (94,140 | ) |
|
| (176,466 | ) |
|
| (3,844,644 | ) |
|
| (94,140 | ) |
Patent activity costs |
|
| (8,004 | ) |
|
| 17,648 |
|
|
| (19,319 | ) |
|
| (8,004 | ) |
Net cash used in investing activities |
|
| (185,703 | ) |
|
| (158,818 | ) |
|
| (3,863,963 | ) |
|
| (185,703 | ) |
Financing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Proceeds from issuance of Series 1B Preferred Stock |
|
| 880,000 |
|
|
| — |
| ||||||||
Proceeds from issuance of bridge loan |
|
| 1,000,000 |
|
|
| — |
|
|
| — |
|
|
| 1,000,000 |
|
Proceeds from issuance of stock and warrants |
|
| 4,000,000 |
|
|
| 10,500,000 |
|
|
| — |
|
|
| 4,000,000 |
|
Prepayment of Equity Offering |
|
| 2,088,290 |
|
|
| — |
| ||||||||
Payment of convertible notes |
|
| (1,025,423 | ) |
|
| — |
| ||||||||
Net cash provided by financing activities |
|
| 5,000,000 |
|
|
| 10,500,000 |
|
|
| 1,942,867 |
|
|
| 5,000,000 |
|
Effect of foreign exchange rate on cash |
|
| 17,240 |
|
|
| — |
| ||||||||
Net change in cash and cash equivalents |
|
| (3,111,489 | ) |
|
| 4,113,369 |
|
|
| (9,233,254 | ) |
|
| (3,111,489 | ) |
Cash and cash equivalents at beginning of period |
|
| 5,961,760 |
|
|
| 167,725 |
|
|
| 11,483,018 |
|
|
| 5,961,760 |
|
Cash and cash equivalents at end of period |
| $ | 2,850,271 |
|
| $ | 4,281,094 |
|
| $ | 2,249,764 |
|
| $ | 2,850,271 |
|
Non-Cash Transactions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Conversion of bridge loan into common stock and warrants |
| $ | 1,000,000 |
|
| $ | — |
|
| $ | — |
|
| $ | 1,000,000 |
|
Right-of-use assets acquired through operating lease liabilities |
| $ | 21,045 |
|
| $ | — |
|
| $ | — |
|
| $ | 21,045 |
|
Purchases of equipment not yet paid at end of period |
| $ | 202,556 |
|
| $ | — |
| ||||||||
Non-cash conversions of preferred stock and convertible notes to equity |
| $ | 10,400,000 |
|
| $ | 5,800,000 |
| ||||||||
Non-cash forgiveness of PPP loan |
| $ | — |
|
| $ | 193,200 |
| ||||||||
Purchase and return of equipment purchased on credit |
| $ | (202,556 | ) |
| $ | 202,556 |
| ||||||||
Non-cash conversions of convertible notes to equity |
| $ | 2,912,759 |
|
| $ | 10,400,000 |
| ||||||||
Series 1A preferred stock conversion |
| $ | 740 |
|
| $ | — |
|
| $ | — |
|
| $ | 740 |
|
Down round deemed dividend |
| $ | 11,653,986 |
|
| $ | — |
| ||||||||
Supplemental disclosure of cash flow information: |
|
|
|
|
|
| ||||||||||
Cash paid during the year for: |
|
|
|
|
|
| ||||||||||
Interest |
| $ | 233,436 |
|
| $ | — |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION
Ascent Solar Technologies, Inc. (the “Company") is currently focusing on integrating its PVphotovoltaic ("PV") products into scalable and high value markets such as agrivoltaics, aerospace, satellites, near earth orbiting vehicles, and fixed wing unmanned aerial vehicles (“UAV”). 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 produce high quality bare modules, and 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 integrators and end-product manufacturers across our designated target industries.products like fixed-wing UAVs. Ascent sees significant overlap of the needs of end users across these industries and can achieve economies of scale in sourcing, development, and production ofin commericializing products for these customers.
On January 28, 2022March 13, 2023, the Company redeployed its Thornton manufacturing facility as a Perovskite Center of 5:00 pm Eastern Time,Excellence and dedicated the facility to the industrial commercialization of the Company's patent-pending Perovskite solar technologies. On April 18, 2023, the Company completed its acquisition of the manufacturing assets of Flisom AG ("Flisom"), a Zurich based thin-film solar manufacturer and on June 16, 2023, exercised a put option to sell the assets (see Note 5). The Company is planning to restart production at its Thornton facility.
On September 11, 2023, the Company effected a reverse stock split of the Company’s common stock par value $0.0001 per share (the “Common Stock”) at a ratio of one-for-five thousandone-for-two hundred (the “Reverse Stock Split”). The Company’s common stock began trading on a split-adjusted basis at 9:30 am Eastern Time on January 31, 2022.September 12, 2023. Stockholders also received one whole share of Common Stockcommon stock in lieu of a fractional share and no fractional shares were issued. All shares and per share amounts in the unaudited condensed consolidated financial statements and accompanying notes have been retroactively adjusted to give effect to the Reverse Stock Split.
Following the Reverse Stock Split, the Company’s issued and outstanding shares of Common Stock were decreased from approximately 23.7 billion pre-split shares to 4.8 million post-split shares. In connection with the Reverse Stock Split effectiveness, the number of authorized shares of the Company's Common Stock were decreased from 30 billion to 500 million shares.
NOTE 2. BASIS OF PRESENTATION
The accompanying, unaudited, condensed consolidated financial statements have been derived from the accounting records of the Company as of September 30, 20222023, and December 31, 2021,2022, and the results of operations for the three and nine months ended September 30, 20222023, and 2021. All significant inter-company balances and transactions have been eliminated in the accompanying condensed consolidated financial statements.2022.
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, 20212022, has been derived from the audited financial statements as of that date but does not include all of the information and footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.2022. These unaudited condensed consolidated financial statements and notes should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.2022.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Operating results for the three and nine months ended September 30, 20222023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.2023.
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, 2021. There2022. Except for the adoption of FASB ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”) as disclosed below, there have been no significant changes to our accounting policies as of September 30, 2022.2023.
6
Revenue Recognition:
Product revenue. The Company recognizes revenue for the sale of PV modules and other equipment sales at a point in time following the transfer of control of such products to the customer, which typically occurs upon shipment or delivery depending on the terms of the underlying contracts. For module and other equipment sales contracts that contain multiple performance obligations, the Company allocates the transaction price to each performance obligation identified in the contract based on relative standalone selling prices, or estimates of such prices, and recognizes the related revenue as control of each individual product is transferred to the customer.
During the three months ended September 30, 20222023 and 2021,2022, the Company recognized product revenue of $6,344$209,496 and $11,723,$6,344, respectively. During the nine months ended September 30, 20222023 and 2021,2022, the Company recognized product revenue of $688,125$395,106 and $557,369,$688,125, respectively. DuringFor the three and nine months ended September 30, 2022 and 2021,2023, one customer comprised 84%100% and 92%, respectively75% of the total product revenue. revenue, respectively.
Milestone and engineering revenue. Each milestone and engineering arrangement is a separate performance obligation. The transaction price is estimated using the most likely amount method and revenue is recognized as the performance obligation is satisfied through achieving manufacturing, cost, or engineering targets. During the three and nine months ended September 30, 2023 and 2022, the Company recognized total milestone and engineering revenue of $0$20,458 and $522,000,$–, respectively. OfDuring the $522,000, $512,000nine months ended September 30, 2023 and 2022, the Company recognized total milestone and engineering revenue of $60,374 and $522,000, respectively. $512,000 of the $522,000 earned in the nine months ended September 30, 2022 was earned from TubeSolar AG (“TubeSolar”), a related party. The Company did not have Milestone and engineering revenue during the three and nine months ended September 30, 2021.
Government contracts revenue. Revenue from government research and development contracts is generated under terms that are cost plus fee or firm fixed price. The Company generally recognizes this revenue over time using cost-based input methods, which recognizes revenue and gross profit as work is performed based on the relationship between actual costs incurred compared to the total estimated costs of the contract. In applying cost-based input methods of revenue recognition, the Company uses the actual costs incurred relative to the total estimated costs to determine our progress towards contract completion and to calculate the corresponding amount of revenue to recognize.
Cost based input methods of revenue recognition are considered a faithful depiction of the Company’s efforts to satisfy long-term government research and development contracts and therefore reflect the performance obligations under such contracts. Costs incurred that do not contribute to satisfying the Company’s performance obligations are excluded from the input methods of revenue recognition as the amounts are not reflective of transferring control under the contract. Costs incurred towards contract completion may include direct costs plus allowable indirect costs and an allocable portion of the fixed fee. If actual and estimated costs to complete a contract indicate a loss, provision is made currently for the loss anticipated on the contract.
No government contract revenue was recognized during the three and nine months ended September 30, 20222023 and 2021.2022.
Accounts Receivable. As of September 30, 20222023 and December 31, 2021,2022, the Company had an accounts receivable, net balance of $112,000$– and $49,250,$1,769, respectively. As of September 30, 2022, one customer comprised 100% of the total net accounts receivable balance. As of September 30, 20222023 and December 31, 2021,2022, the Company had an allowance for doubtful accounts of $26,000$– and $26,000,$26,000, respectively.
Deferred revenue for the nine months ended September 30, 20222023 was as follows:
Balance as of January 1, 2023 | $ | 13,000 |
|
Additions |
| 29,350 |
|
Recognized as revenue |
| (42,350 | ) |
Balance as of September 30, 2023 | $ | - |
|
Balance as of January 1, 2022 | $ | 22,500 |
|
Additions |
| 206,279 |
|
Recognized as revenue |
| (228,779 | ) |
Balance as of September 30, 2022 | $ | - |
|
Share-Based Compensation: The Company measures and recognizes compensation expense for all share-based payment awards made to employees, officers, directors, and consultants based on estimated fair values. The value of the portion of the award that is ultimately expected to vest, net of estimated forfeitures, is recognized as expense on a straight-line basis, over the requisite service period in the Company’s Statements of Operations. Share-based compensation is based on awards ultimately expected to vest and is reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, as necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company estimates the fair value of its restricted stock awards as its stock price on the grant date.
7
Earnings per Share: Earnings per share (“EPS”) are the amount of earnings attributable to each share of common stock. Basic EPS has been computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding during the period. Income available to common stockholders has been computed by deducting dividends accumulated for the period on cumulative preferred stock (whether or not earned) and deemed dividends due to down round financings from net income. For the nine months ended September 30, 2023, income available to common stockholders was adjusted for deemed dividends due to down round financings of $11,653,986 (Note 11). Diluted earnings per share has been computed by dividing net income available to common stockholders adjusted on an if-converted basis for the period by the
7
weighted average number of common shares and potentially dilutive common share outstanding (which consist of warrants, options, restricted stock units and convertible securities using the if-converted or treasury stock method or the if-converted method, as applicable, to the extent they are dilutive). Approximately Approximately 761,144 thousand and 12 thousand381 shares of dilutive shares were excluded from the three and nine months period ended September 30, 2023 and 2022, respectively, EPS calculation as their impact is antidilutive. Approximately 29 million537 thousand and 188 million58 shares of dilutive shares were excluded from the three and nine months period ended September 30, 2021,2023 and 2022, respectively, EPS calculation as their impact is antidilutive.
Net loss attributable to common shareholders for the three and nine months ended September 30, 2023 was as follows:
|
| Three months ended |
|
| Nine months ended |
| ||||
|
| September 30, 2023 |
|
| September 30, 2023 |
| ||||
Net Loss |
| $ |
| (1,909,273 | ) |
| $ |
| (11,906,097 | ) |
Down round deemed dividend |
|
|
| - |
|
|
|
| (11,653,986 | ) |
Net Loss attributable to common shareholders |
|
|
| (1,909,273 | ) |
|
|
| (23,560,083 | ) |
Earnings Per Share (Basic and Diluted) |
|
|
| (4.04 | ) |
|
|
| (66.40 | ) |
Recently Adopted or to be Adopted Accounting Policies
In August 2020,On January 1, 2023, the FASB issuedCompany adopted ASU No. 2020-06, Debt - Debt with Conversion2020-06. The adoption resulted in the elimination of the beneficial conversion feature recognized on the Company’s convertible debt. The Company elected to apply the modified retrospective method to all open contracts as of January 1, 2023, and Other Options (Subtopic 470-20) and Derivatives and Hedging Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.the cumulative effect of initially applying ASU 2020-06 will simplifywas recognized as an adjustment to the accounting for convertible instruments by reducing the numberCompany’s retained earnings balance as of accounting models for convertible debt instrumentsJanuary 1, 2023. Comparative periods have not been restated and convertible preferred stock. Limiting the accounting models results in fewer embedded conversion features being separately recognized from the host contract as compared with current U.S. GAAP. Convertible instruments that continue to be subject to separation models are (1)reported under the accounting standard in effect for those with embedded conversion features that are not clearly and closely relatedperiods.
The cumulative effect of the changes made to the host contract, that meet the definition of a derivative, and that do not qualifyCompany’s January 1, 2023, unaudited condensed balance sheet for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. ASU 2020-06 also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. ASU 2020-06 will be effective for smaller reporting public companies for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years and can be adopted using either a modified retrospective or a fully retrospective method of transition. Management has not yet evaluated the impact that the adoption of ASU 2020-06 will haveis as follows:
|
| Balance at December 31, 2022 |
|
| Adjustments Due to Adoption |
|
| Balance at January 1, 2023 |
| ||||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
| |||
Non-current convertible notes, net |
| $ |
| 5,268,399 |
|
| $ |
| 3,686,243 |
|
| $ |
| 8,954,642 |
|
Shareholders' equity |
|
|
|
|
|
|
|
|
|
|
|
| |||
Additional paid in capital |
|
|
| 452,135,653 |
|
|
|
| (3,795,874 | ) |
|
|
| 448,339,779 |
|
Accumulated deficit |
|
|
| (447,537,493 | ) |
|
|
| 109,631 |
|
|
|
| (447,427,862 | ) |
The impact due to the change in accounting principle on net income and earnings per share for the Company’s condensed consolidated financial statement presentation or disclosures.three and nine months ended September 30, 2023 is as follows:
8
|
| Post ASU 2020-06 |
|
| Pre ASU 2020-06 |
|
| Difference |
| ||||||
Three months ended September 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
| |||
Net Loss |
| $ |
| (1,909,273 | ) |
| $ |
| (5,668,147 | ) |
| $ |
| 3,758,874 |
|
Net Loss attributable to common shareholders |
|
|
| (1,909,273 | ) |
|
|
| (5,668,147 | ) |
|
|
| 3,758,874 |
|
Earnings Per Share (Basic and Diluted) |
|
|
| (4.04 | ) |
|
|
| (11.98 | ) |
|
|
| (7.94 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Nine months ended September 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
| |||
Net Loss |
| $ |
| (11,906,097 | ) |
| $ |
| (20,553,708 | ) |
| $ |
| 8,647,611 |
|
Net Loss attributable to common shareholders |
|
|
| (23,560,083 | ) |
|
|
| (32,207,694 | ) |
|
|
| 8,647,611 |
|
Earnings Per Share (Basic and Diluted) |
|
|
| (66.40 | ) |
|
|
| (90.77 | ) |
|
|
| (24.37 | ) |
Other new pronouncements issued but not effective as of September 30, 20222023 are not expected to have a material impact on the Company’s unaudited condensed consolidated financial statements.
NOTE 4. LIQUIDITY, CONTINUED OPERATIONS, AND GOING CONCERN
During the year ended December 31, 2021,2022, the Company entered into multiple financing agreements to fund operations. Further discussion of these transactions can be found in Notes 8, 9, 10,12 and 1115 in the Company's Annual Report on Form 10-K for the year ended December 31, 2021.2022.
TheIn March 2023, the Company has continued limited PVredeployed its Thornton manufacturing facility to focus on industrial commercialization of the Company's patent-pending Perovskite solar technologies. In April 2023, the Company purchased manufacturing assets in Zurich, Switzerland with plans to commence manufacturing using this equipment; however, in June 2023, Management exercised its put option to sell the this equipment (see Note 5) and is planning to restart production at its manufacturingThornton facility. The CompanyManagement does not expect that sales revenue and cash flows will be sufficient to support operations and cash requirements until it has fully implemented its product strategy.the Company is able to achieve large scale production capacities. During the nine months ended September 30, 20222023 the Company used $7,925,786$7,329,398 in cash for operations.
AdditionalAdditionally, projected product revenues aremay not anticipated to result in a positive cash flow position for the next twelve months overall and, as of September 30, 2022, themonths. The Company hashad a working capital deficit of $59,948. As such,$8,726,319 as of September 30, 2023. Management does not believe cash liquidity is not sufficient for the next twelve months and will require additional financing.
The Company has launched an initiativecontinues to expandlook for ways to produce its production of PV films at industrial scale and to secure long-term contracts for the sale of such output. The Company continues activities related to securing additional financing through strategic or financial investors, but there is no assurance the Company will be able to raise additional capital on acceptable terms or at all. If the Company's revenues do not increase rapidly, and/or additional financing is not obtained, the Company will be required to significantly curtail operations to reduce costs and/or sell assets. Such actions would likely have an adverse impact on the Company's future operations.
As a result of the Company’s recurring losses from operations and the need for additional financing to fund its operating and capital requirements, there is uncertainty regarding the Company’s ability to maintain liquidity sufficient to operate its business effectively, which raises doubt as to the Company’s ability to continue as a going concern.
8
Management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. These unaudited condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.
9
NOTE 5. ASSET ACQUISITION
On April 17, 2023, the Company entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Flisom (the “Seller”), pursuant to which, among other things, the Company purchased certain assets relating to thin-film photovoltaic manufacturing and production from the Seller (collectively, the “Assets”), including (i) certain manufacturing equipment located at Seller’s Niederhasli, Switzerland facility (the “Manufacturing Facility”) and (ii) related inventory and raw materials at the Manufacturing Facility (collectively, the “Transaction”). In connection with the Transaction, the Company also acquired, by operation of Swiss law, the employment contracts of certain employees of Seller in Switzerland who are functionally predominantly working with the Assets, subject to such employees being offered the right to remain employed by Seller after the closing of the Transaction. The total consideration paid by the Company to Seller in connection with the Transaction was an aggregate amount in cash equal to $2,800,000.
At the Closing, the Company and Seller also entered into (i) a Transition Services Agreement requiring the Seller to provide transition support for the Company’s operation of the Assets, with fees to be paid by the Company for performing defined support services, (ii) a Sublease Agreement allowing the Company’s to use the Manufacturing Facility where the Assets are located, and (iii) a Technology License Agreement, pursuant to which Seller granted the Company a revocable, non-exclusive license to certain intellectual property rights of the Seller used in the operation of the Assets (the “Licensed IP”), subject to certain encumbrances on the Licensed IP in favor of Seller’s lender. The Company will also receive proceeds from fulfilling a supply agreement obligation for one of the Seller’s customers.
The total purchase price, including transaction costs of $1,283,926, was allocated as follows:
| Asset Price Allocation |
| |
Inventory |
|
| |
Raw Material | $ | 130,030 |
|
Finished Goods |
| 62,427 |
|
Other Assets |
| 98,746 |
|
Fixed Assets |
|
| |
Manufacturing machinery and equipment |
| 3,682,621 |
|
Furniture, fixtures, computer hardware and |
| 110,102 |
|
In addition to the Asset Purchase Agreement, on April 20, 2023, the Company entered into a letter agreement (the “Letter Agreement”) with FL1 Holding GmbH, a German company (“FL1”) that is affiliated with BD 1 Investment Holding, LLC (“BD1”), an affiliate of the Company, BD1 and BD Vermögensverwaltung GmbH (“BD”), the parent entity of FL1 (collectively, the “Affiliates”), in connection with the prospective acquisition by FL1 of substantially all shares in Seller following the Closing, subject to the satisfaction of certain terms and conditions. The Letter Agreement, among other things, granted the Company the option, but not the obligation, (i) to purchase certain intellectual property rights of Seller relating to thin-film photovoltaic manufacture and production for $2,000,000 following the release of certain liens on such intellectual property rights in favor of Seller’s lender, and (ii) for a period of 12 months following the Closing, to resell the Assets to the Affiliates for an aggregate amount equal to $5,000,000, with such transaction to close within 90 days following the exercise of the Company’s resale right. On June 16, 2023, the Company exercised its option to resell the Assets to the Affiliates. The Company has not received payment on this option and Management continues to discuss with the Affiliates the Company's options and rights to resolve this matter.
In September, 2023, Flisom filed for bankruptcy in Switzerland. These proceeding are in the initial phase in which the bankruptcy office will need to determine if the proceedings can be carried out with a creditors' meeting, without a creditors' meeting, or will be discontinued due to lack of Flisom assets to pay for these proceedings. The Company's purchased Assets are currently located in the Manufacturing Facility.
Management has retained legal counsel who have been in discussions with the bankruptcy office and the Manufacturing Facility landlord. While it is too early to predict the outcome of this matter or whether an adverse result would have a material adverse impact on our operations or financial position, Management continues to assess its options.
10
As of September 30, 2023, the Company's the book value of the Assets was approximately $4,070 thousand and the Company had a payable to Flisom of approximately $750 thousand.
NOTE 5.6. RELATED PARTY TRANSACTIONS
On September 15, 2021, the Company entered into a Long-Term Supply and Joint Development Agreement (“JDA”) with TubeSolar. Under the terms of the JDA, the Company will produce, and TubeSolar will purchase, thin-film photovoltaic (“PV”) foils (“PV Foils”) for use in TubeSolar’s solar modules for agricultural photovoltaic (“APV”) applications that require solar foils for its production. Additionally, the Company will receive (i) up to $4$4 million of non-recurring engineering (“NRE”) fees, (ii) up to $13.5$13.5 million of payments upon achievement of certain agreed upon production and cost structure milestones and (iii) product revenues from sales of PV Foils to TubeSolar. The JDA has no fixed term, and may only be terminated by either party for breach. $500,000No revenue was recognized under the JDA during the three and nine months ended September 30, 2023. $512,000 of NRE revenue and $3,000 PV Foil revenue were recognized under the JDA during the nine months ended September 30, 2022. In June, 2023, TubeSolar filed an application for the opening of insolvency proceedings with the competent insolvency court due to insolvency.
The Company and TubeSolar have also jointly established Ascent Solar Technologies Germany GmbH (“Ascent Germany”), in which TubeSolar holds of 30%30% of the entity. Ascent Germany was established to operate a PV manufacturing facility in Germany that will produce and deliver PV Foils exclusively to TubeSolar. Until Ascent Germany’s facility is fully operational, PV Foils will be manufactured in the Company’s existing facility in Thornton, Colorado. The parties expect to jointly develop next generation tooling for use in manufacturing PV Foils at the JV facility. The Company accounts for this investment as an equity method investment as it does not have control of this entity, but does have significant influence over the activities that most significantly impact the entity’s operations and financial performance. The Company contributed $83,559$- and $83,559 to Ascent Germany during the nine months ended September 30, 2022. The2023 and 2022, respectively. There has been no material activity in Ascent Germany since its establishment and the Company currently cannot quantify its maximum exposure in this entity.
NOTE 6.7. PROPERTY, PLANT AND EQUIPMENT
The following table summarizes property, plant and equipment as of September 30, 20222023 and December 31, 2021:2022:
|
| As of September 30, |
|
| As of December 31, |
|
| As of |
|
| As of |
| ||||
|
| 2022 |
|
| 2021 |
|
| 2023 |
|
| 2022 |
| ||||
Furniture, fixtures, computer hardware and computer software |
| $ | 472,004 |
|
| $ | 473,448 |
|
| $ | 578,690 |
|
| $ | 482,235 |
|
Manufacturing machinery and equipment |
|
| 21,729,155 |
|
|
| 21,863,624 |
|
|
| 23,552,252 |
|
|
| 21,739,504 |
|
Leasehold improvements |
|
| 81,001 |
|
|
| - |
|
|
| 15,994 |
|
|
| 87,957 |
|
Manufacturing machinery and equipment, in progress |
|
| 276,229 |
|
|
| 88,863 |
|
|
| 35,359 |
|
|
| 280,473 |
|
Depreciable property, plant and equipment |
|
| 22,558,389 |
|
|
| 22,425,935 |
|
|
| 24,182,295 |
|
|
| 22,590,169 |
|
Less: Accumulated depreciation and amortization |
|
| (22,022,653 | ) |
|
| (22,146,273 | ) |
|
| (20,125,328 | ) |
|
| (22,038,508 | ) |
Net property, plant and equipment |
| $ | 535,736 |
|
| $ | 279,662 |
|
| $ | 4,056,967 |
|
| $ | 551,661 |
|
Depreciation expense for the three months ended September 30, 2023 and 2022 was $18,931and 2021 was $15,705 and $5,956,$15,705, respectively. Depreciation expense for the nine months ended September 30, 2023 and 2022 was $59,570and 2021 was $40,622 and $11,404,$40,623, respectively. Depreciation expense is recorded under “Depreciation and amortization expense” in the unaudited Condensed Consolidated Statements of Operations.
NOTE 7.8. OPERATING LEASE
The Company’s operating leases arelease is primarily comprised of approximately 100,000 rentable square feet for its manufacturing and operations and a Company car. These leases areoperations. This lease is classified and accounted for as an operating leases.lease. The building lease term is for 88 months commencing on September 21, 2020 at a rent of $50,000$50,000 per month including taxes, insurance and common area maintenance until December 31, 2020. Beginning January 1, 2021, the rent adjusted to $80,000$80,000 per month on a triple net basis and shall increase at an annual rate of 3%3% per annum until December 31, 2027.
Effective September 1, 2023, the lease was amended to reduce the rentable square feet from 100,000 to 73,319 and the rent and tenant share of expenses were decreased in proportion to the reduction in rentable square feet. The Company carrecorded this as a lease term is for 39 months commencing on June 30, 2022. The Company mademodification in accordance with ASC 842, Leases, and recorded a $5,000 initial paymentreduction to the right of use asset and pays $493 per month.lease
911
liability of $1,292,316 and $1,376,994, respectively. The Company recognized a gain on the lease modification of $84,678, which was recorded as other income in the unaudited Condensed Statement of Operations.
As of September 30, 20222023 and December 31, 2021,2022, assets and liabilities related to the Company’s leases were as follows:
|
| As of September 30, |
|
| As of December 31, |
|
| As of |
|
| As of |
| ||||
|
| 2022 |
|
| 2021 |
|
| 2023 |
|
| 2022 |
| ||||
Operating lease right-of-use assets, net |
| $ | 4,489,930 |
|
| $ | 4,984,688 |
|
| $ | 2,476,958 |
|
| $ | 4,324,514 |
|
Current portion of operating lease liability |
|
| 708,762 |
|
|
| 646,742 |
|
|
| 471,497 |
|
|
| 733,572 |
|
Non-current portion of operating lease liability |
|
| 4,004,667 |
|
|
| 4,532,490 |
|
|
| 2,171,440 |
|
|
| 3,827,878 |
|
During the three and nine months ended September 30, 2023 and 2022, the Company recorded operating lease expense included in selling, general and administrative expenses of $261,069$236,925 and $777,854,$261,069, respectively. During the three and nine months ended September 30, 2021,2023 and 2022, the Company recorded operating lease expense included in selling, general and administrative expenses of $258,392$770,836 and $775,177,$777,854, respectively.
Future maturities of the operating lease liability are as follows:
Remainder of 2022 |
| $ | 248,680 |
| ||||
2023 |
|
| 1,024,381 |
| ||||
Remainder of 2023 |
| $ | 186,682 |
| ||||
2024 |
|
| 1,054,935 |
|
|
| 769,130 |
|
2025 |
|
| 1,084,833 |
|
|
| 792,203 |
|
2026 |
|
| 1,112,903 |
|
|
| 815,969 |
|
Thereafter |
|
| 1,146,290 |
| ||||
2027 |
|
| 840,449 |
| ||||
Total lease payments |
|
| 5,672,022 |
|
|
| 3,404,433 |
|
Less amounts representing interest |
|
| (958,593 | ) |
|
| (761,496 | ) |
Present value of lease liability |
| $ | 4,713,429 |
|
| $ | 2,642,937 |
|
The remaining weighted average lease term and discount rate of the operating leases is 63.451 months and 7.0%12.0%, respectively.
NOTE 8.9. INVENTORIES
Inventories, net of reserves, consisted of the following at September 30, 20222023 and December 31, 2021:2022:
|
| As of |
|
| As of |
| ||
|
| 2023 |
|
| 2022 |
| ||
Raw materials |
| $ | 577,536 |
|
| $ | 577,799 |
|
Work in process |
|
| 10,267 |
|
|
| 37,351 |
|
Finished goods |
|
| 48,216 |
|
|
| 133 |
|
Total |
| $ | 636,019 |
|
| $ | 615,283 |
|
|
| As of September 30, |
|
| As of December 31, |
| ||
|
| 2022 |
|
| 2021 |
| ||
Raw materials |
| $ | 649,421 |
|
| $ | 575,154 |
|
Work in process |
|
| 34,964 |
|
|
| 15,803 |
|
Finished goods |
|
| - |
|
|
| 1,215 |
|
Total |
| $ | 684,385 |
|
| $ | 592,172 |
|
NOTE 10. OTHER PAYABLE
NOTE 9. 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.$250,000. The note bears interest of 5%5% per annum and matured on February 28, 2018. As of September 30, 2022,2023, the Company had not made any payments on this note, the accrued interest was $65,685,$78,185, and the note is due upon demand. This note is recorded as Other payable in the unaudited Condensed Balance Sheets.
1012
NOTE 10.11. CONVERTIBLE NOTES
The following table provides a summary of the activity of the Company's unsecured,secured, convertible, promissory notes:
| Principal Balance 1/1/2022 |
| New Notes |
| Notes assigned or exchanged |
| Notes converted |
| Principal Balance 9/30/2022 |
| |||||
BD1 Notes (related party) | $ | 9,900,000 |
| $ | — |
| $ | (2,000,000 | ) | $ | (7,900,000 | ) | $ | — |
|
Nanyang Note |
| 500,000 |
|
| — |
|
| 1,000,000 |
|
| (1,500,000 | ) |
| — |
|
Fleur Note |
| — |
|
| — |
|
| 1,000,000 |
|
| (1,000,000 | ) |
| — |
|
| $ | 10,400,000 |
| $ | — |
| $ | — |
| $ | (10,400,000 | ) | $ | — |
|
| Principal |
| Notes converted |
| Principal |
| Less: |
| Net Principal |
| |||||
Sabby Volatility Warrant Master Fund, LTD | $ | 7,392,899 |
| $ | (7,392,899 | ) | $ | — |
| $ | — |
| $ | — |
|
L1 Capital Global Opportunities Master Fund, Ltd |
| 7,500,000 |
|
| (7,093,333 | ) |
| 406,667 |
|
| (87,126 | ) |
| 319,541 |
|
| $ | 14,892,899 |
| $ | (14,486,232 | ) | $ | 406,667 |
| $ | (87,126 | ) | $ | 319,541 |
|
Sabby / L1 Convertible Notes
BD1On December 19, 2022, the Company entered into a Securities Purchase Contract (the “Securities Purchase Contract”) with two institutional investors (each, an “Investor” and collectively, the “Investors”) for the issuance to the Investors of $12,500,000 in aggregate principal amount of Senior Secured Original Issue 10% Discount Convertible Note
On January 3, 2022, BD 1 Investment Holding, LLC (“BD1”) sold and assigned $1,000,000 of its convertible notes (“BD1 ConvertibleAdvance Notes pursuant to a direct registered offering (the “Registered Advance Notes”) and $2,500,000 in aggregate principal amount of Senior Secured Original Issue 10% Discount Convertible Advance Notes in a concurrent private placement (the “Private Placement Advance Notes” and, together with the Registered Advance Notes, the “Advance Notes”).
On March 29, 2023, the Company and each of the Investors entered into a Waiver and Amendment Agreement (the “Amendment”) relating to Fleurthe Securities Purchase Contract and the Advance Notes to waive any event of default arising under Section 2.1 of the Advance Notes relating to the Company’s receipt of notice from the Listing Qualifications Department of Nasdaq indicating that the Company is not in compliance with the $1.00 Minimum Bid Price Requirement set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on The Nasdaq Capital Pte Ltd (“Fleur”Market (the “Specified Default”). On January 21, 2022, BD1 sold
Pursuant to the Amendment, the Company and assigned $1,000,000each of its convertible notesthe Investors agreed to Nanyang Investment Management Pte Ltd (“Nanyang”). The aggregate remaining principal balancewaive the Specified Default and further agreed to the amend the Advance Notes to provide that (i) the new “Floor Price” for all purposes of the Advance Notes is $0.20 per share of the Company’s common stock, (ii) until the Company regains compliance with the $1.00 Minimum Bid Price Requirement, “Conversion Price” under the Advance Notes will mean the “Alternative Conversion Price” (as defined in the Advance Notes) and (iii) the Company will make certain prepayments of the Advance Notes held by BD1 after these assignments was $7,900,000. On February 1, 2022, BD1 converted all of their remaining $7,900,000the Investors on the following dates and in the following aggregate outstanding principal amount into 15,800,000 shares of common stock. The remaining discount of approximately $1,721,000 was charged to interest expense upon conversion.
Nanyang Convertible Note
On January 21, 2022, as discussed above, BD1 assigned $1,000,000 of the BD1 Convertible Notes to Nanyang. This note does not bear any interest and will mature on December 18, 2025. Nanyang has the right,cash amounts, at any time until the note is fully paid, to convert any outstanding and unpaid principal into shares of common stock at a fixed conversion price equal to $0.50 per share. Shares100% of common stock may notthe principal amount of the Advance Notes to be issued pursuantrepaid plus accrued and unpaid interest thereon (if any). The Company's failure to this note if, aftercomply with the terms of the Amendment would constitute an Event of Default under the Advance Notes.
On April 12, 2023, the Company and each of the Investors entered in a further amendment to the Amendment (the “Revised Amendment”), to provide for a consistent prepayment schedule for the Advance Notes held by each of the Investors. After giving effect to the conversion or issuance, Nanyang, together with its affiliates, would beneficially ownRevised Amendment, the Advance Notes will be prepaid by the Company in excess of 4.99% of the outstanding shares of the Company’s common stock. The discountcash on the principal is charged to interest expense, ratably, overfollowing dates and in the life of the note.
On February 2, 2022, Nanyang converted $600,000 of their convertible notes into 1,200,000 shares of common stock. The associated discount on the converted portion of the notes of approximately $133,000 was charged to interest expense.
In July 2022, the Company and Nanyang agreed to waive the 4.99% cap on securities beneficially owned by Nanyang and its affiliates. On July 11, 2022, Nanyang converted all of their remaining $900,000 balance of their convertible notes into 1,800,000 shares of common stock. The remaining associated discount of approximately $176,000 on the note was charged to interest expense.
Fleur Convertible Note
On January 21, 2022, as discussed above, BD1 assigned $1,000,000 of the BD1 Convertible Notes to Fleur. This note does not bear any interest and will mature on December 18, 2025. Fleur has the right,following aggregate amounts, at any time until the note is fully paid, to convert any outstanding and unpaid principal into shares of common stock at a fixed conversion price equal to $0.50 per share. Shares of common stock may not be issued pursuant to this note if, after giving effect to the conversion or issuance, Fleur, together with its affiliates, would beneficially own in excess of 4.99%100% of the outstanding sharesprincipal amount of the Advance Notes to be prepaid plus accrued and unpaid interest thereon (if any). The Company’s common stock. The discount onfailure to comply with the principal is charged to interest expense, ratably, over the lifeterms of the note. Revised Amendment would constitute an “Event of Default” under the Advance Notes.
Prepayment Date | Aggregate |
| |
April 3, 2023 | $ | 333,333 |
|
April 13, 2023 |
| 333,333 |
|
May 18, 2023 |
| 666,667 |
|
June 19, 2023 |
| 666,667 |
|
| $ | 2,000,000 |
|
On February 2, 2022, Fleur converted $700,000 of their convertible notes into 1,400,000 shares of common stock. The associated discount onMay 22, 2023, the converted portionInvestors and the Company agreed to defer for 90 days each of the notestwo prepayments of approximately $155,000 was charged to interest expense. The discount on$666,667 that were scheduled for May 18, 2023 and June 19, 2023. Accordingly, (i) the remaining principal will be charged to interest expense, ratably, overMay 18, 2023 payment is deferred until August 16, 2023, and (ii) the life of the note.June 19, 2023 payment is delayed until September 17, 2023.
In July 2022, the Company and Fleur agreed to waive the 4.99% cap on securities beneficially owned by Fleur. 13On July 11, 2022, Fleur converted all of their remaining $300,000 balance of their convertible notes into 600,000 shares of common stock. The remaining associated discount of approximately $59,000 on the note was charged to interest expense.
11
On May 25, 2023, the Company and each of the Investors entered into a Waiver and Amendment Agreement (the “Second Amendment”) relating to the Securities Purchase Contract and the Advance Notes. Pursuant to the Second Amendment, the Company and each of the Investors agreed to amend the Advance Notes to provide that if the Company receives a Notice of Conversion at a time that the Conversion Price (or, as applicable, the Alternative Conversion Price) then in effect Price, without regard to the Floor Price (the “Applicable Conversion Price”), is less than the Floor Price then in effect, the Company shall issue a number of shares equal to the Conversion Amount divided by such Floor Price and, at its election (x) pay the economic difference between the Applicable Conversion Price and such Floor Price (the “Outstanding Conversion Amount”) in cash at such time or (y) pay the Outstanding Conversion Amount following the consummation of a reverse stock split by the Company (1) in cash or (2) by issuing to the Holder a number of shares of Common Stock with an aggregate value equal to the Outstanding Conversion Amount, with the value per share of Common Stock for purposes of such calculation equal to (i) if such shares are issued on or prior to August 23, 2023, the daily VWAP of the Common Stock on the Trading Day following the date of the consummation of such reverse stock split or (ii) if such shares are issued after August 23, 2023, 90% of the daily VWAP of the Common Stock on the Trading Day following the date of the consummation of such reverse stock split. As of September 30, 2023, the Company had $6,470,540 in Outstanding Conversion Amounts recorded as Conversions Payable on the unaudited Condensed Balance Sheets.
The Securities Purchase Contract also included certain warrants to purchase up to 12,567 shares of common stock (the "Warrants"). The Warrants were issued with an exercise price equal to $786 per share, subject to certain adjustments in certain events, including the future issuance by the Company of securities with a purchase or conversion, exercise or exchange price that is less than the exercise price of the Warrants then in effect at any time.
On April 14, 2023 the Company entered a securities purchase agreement (“SPA”) with Lucro Investments VCC-ESG Opportunities Fund (“Lucro”) for an approximate $9 million private placement (the “Private Placement”) of an aggregate of 37,500 shares of the Company’s Common Stock. The per share purchase price for the Shares is $240 per share. The terms of the SPA with Lucro triggered certain adjustments to the Advance Notes and the Warrants in accordance with the existing terms of the outstanding Advance Notes and the outstanding Warrants. Following these adjustments:
On June 29, 2023 the Company entered a securities purchase agreement (“Series 1B SPA”) with accredited investors (the "Accredited Investors") for the private placement of $900,000 for 900 shares of the Company’s newly designated Series 1B Convertible Preferred Stock (“Series 1B Preferred Stock”) (Note 13). Shares of the Series 1B Preferred Stock are convertible at the option of the holder into common stock at an initial conversion price of equal to $28.00 per share.
The terms of the Series 1B SPA triggered certain further adjustments to the Advance Notes and the Warrants in accordance with the existing terms of the outstanding Advance Notes and the outstanding Warrants. Following these further adjustments in June 2023:
Pursuant to ASC 260, Earnings per Share, the Company recorded a deemed dividend for the down round adjustments of $11,653,986 which reduced income available to common shareholders in the Company's earnings per share calculations.
Under the existing terms of the Advance Notes the conversion price may in no event be less than a floor price (the “Floor Price”) of $40 currently. The new adjusted fixed conversion price of the Advance Notes ($1.765) is less than the Floor Price. Accordingly, upon conversion of the Advance Notes, the Company shall issue a number of shares equal to the Conversion
14
Amount divided by such Floor Price and, at its election (x) pay the economic difference between the Applicable Conversion Price and such Floor Price (the “Outstanding Conversion Amount”) in cash at such time or (y) pay the Outstanding Conversion Amount following the consummation of a reverse stock split by the Company (1) in cash or (2) by issuing to the Holder a number of shares of Common Stock with an aggregate value equal to the Outstanding Conversion Amount, with the value per share of Common Stock for purposes of such calculation equal to (i) if such shares are issued on or prior to August 23, 2023, the daily VWAP of the Common Stock on the Trading Day following the date of the consummation of such reverse stock split or (ii) if such shares are issued after August 23, 2023, 90% of the daily VWAP of the Common Stock on the Trading Day following the date of the consummation of such reverse stock split.
During the nine months ended September 30, 2023, the Company settled $14.5 million of principal as follows:
| Debt Settlement |
| |
Equity issued for convertible debt | $ | 2,912,759 |
|
Conversions payable |
| 6,470,540 |
|
Cash repayments |
| 1,025,423 |
|
Accelerated discount recognized in APIC |
| 4,077,510 |
|
Principal settled during the nine months ended September 30, 2023 | $ | 14,486,232 |
|
During the three and nine months ended September 30, 2023, the Company had interest expense of $271,162 and $2,070,669, respectively, of which, $231,536 and $1,773,633 for the three and nine months ended September 30, 2023, respectively, was due to accretion of discount on the Advanced Notes. Interest payable was $85,731 as of September 30, 2023.
NOTE 11.12. SERIES A PREFERRED STOCK
As of January 1, 2022,2023, there were 48,100 shares of Series A Preferred Stock outstanding. Holders of Series A Preferred Stock are entitled to cumulative dividends at a rate of 8%8% per annum when and if declared by the Board of Directors at its sole discretion. The dividends may be paid in cash or in the form of common stock (valued at 10%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). This make-whole provision expired in June 2017.
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 $1,160,000, as$232 million, adjusted for reverse stock splits, for twenty consecutive trading days, or by the holder at any time. The Company has the right to redeem the Series A Preferred Stock at a price of $8.00$8.00 per share, plus any accrued and unpaid dividends, plus the make-whole amount (if applicable). At September 30, 2022,2023, the preferred shares were not eligible for conversion to common shares at the option of the Company. The holder of the preferred shares may convert to common shares at any time. After making adjustment for the Company’s prior reverse stock splits, all 48,100 outstanding Series A preferred shares are convertible into less than one common share. Upon any conversion (whether at the option of the Company or the holder), the holder is entitled to receive any accrued but unpaid dividends.
Except as otherwise required by law (or with respect to approval of certain actions), the Series A Preferred Stock shall have no voting rights. Upon any liquidation, dissolution or winding up of the Company, after payment or provision for payment of debts and other liabilities of the Company, the holders of Series A Preferred Stock shall be entitled to receive, pari passu with any distribution to the holders of common stock of the Company, an amount equal to $8.00 per share of Series A Preferred Stock plus any accrued and unpaid dividends.
As of September 30, 2022,2023, there were 48,100 shares of Series A Preferred Stock outstanding and accrued and unpaid dividends of $453,209.$501,977.
NOTE 12.13. SERIES 1A1B PREFERRED STOCK
On June 29, 2023, the Company entered into the Series 1A Preferred Stock – Tranche 1 Closing
As1B SPA with Accredited Investors for the private placement of January 1, 2022, there were 3,700900 shares of Series 1A1B Preferred Stock outstanding; 1,300 shares owned by Crowdex Investment, LLC (“Crowdex”) and 2,400 shares owned by TubeSolar. Each sharefor $900,000 gross proceeds.
15
The Series 1A1B Preferred Stock has a stated value of $1,000 per share. Shares ofranks senior to the Series 1A Preferred Stock are convertible into common stock by dividing the stated value by the fixed conversion price equalwith respect to $0.50 per common share, subject to standard ratable anti-dilution adjustments.
Outstanding shares of Series 1A Preferred Stock are entitled to vote together with the holders of common stock as a single class (on an as-converted to common stock basis) on any matter presented to the stockholders of the Company for their action or consideration at any meeting of stock holders (or written consent of stockholders in lieu of meeting).
dividends and rights upon liquidation. Holders of the Series 1A1B Preferred Stock do not have voting rights and are not entitled to any fixed rate of dividends. Ifdividends; however, if the Company pays a dividend or otherwise makes a distribution or distributions payable on shares of common stock, then the Company will make a dividend or distribution to the holders of the Series 1A1B Preferred Stock willin such amounts as each share of Series 1B Preferred Stock would have been entitled to receive if such share of Series 1B Preferred Stock was converted into shares of common stock at the time of payment of the stock dividend or distribution on an as-converted to common stock basis. distribution.
There areis no specifiedscheduled or mandatory redemption rights for the Series 1A1B Preferred Stock. Stock and there is no redemption for the Series 1B Preferred Stock exercisable (i) at the option of the Investor, or (ii) at the option of the Company.
Upon our liquidation, dissolution or winding up, holders of Series 1A1B Preferred Stock will be entitled to be paid out of our assets, prior to the holders of our common stock, an amount equal to $1,000$1,000 per share plus any accrued but unpaid dividends (if any) thereon.
On February 1, 2022 Crowdex and TubesSolar converted allShares of their remaining shares 1,300 and 2,400, respectively, ofthe Series 1A1B Preferred Stock are convertible at the option of the holder into 2,600,000 and 4,800,000, respectivelycommon stock at an initial conversion price of equal to $28.00 per share. The conversion price for the Series 1B Preferred Stock is subject to adjustment on the earliest of the date that (a) a resale registration statement relating to the shares of common stock.stock underlying the Series 1B Preferred Stock has been declared effective by the SEC, (b) all of such underlying shares of common stock have been sold pursuant to SEC Rule 144 or may be sold pursuant to SEC Rule 144 without volume or manner-of-sale restrictions, (c) the one year anniversary of the closing provided that a holder of such underlying shares is not an affiliate of the Company or (d) all of such underlying shares may be sold pursuant to an exemption from registration under Section 4(a)(1) of the Securities Act without volume or manner-of-sale restrictions (such earliest date, the “Reset Date”).
On the Reset Date, the conversion price shall be equal to the lower of (i) $0.14 and (ii) 90% of the lowest VWAP for the Company’s common stock out of the 10 trading days commencing 5 trading days immediately prior to the Reset Date, provided that the conversion price may not be adjusted to less than $10.00 per share.
12
TableHolders of Contentsthe Series 1B Preferred Stock (together with its affiliates) may not convert any portion of such Investor’s Series 1B Preferred Stock to the extent that the holder would beneficially own more than 4.99% of the Company’s outstanding shares of common stock after conversion, except that upon at least 61 days’ prior notice from the holders to the Company, the holder may increase the maximum amount of its beneficial ownership of outstanding shares of the Company’s Common Stock after converting the holder’s Series 1B Preferred Stock up to 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the conversion, as such percentage ownership is determined in accordance with the terms of the Series 1B Preferred Stock.
NOTE 13.14. STOCKHOLDERS’ EQUITY (DEFICIT)
Common Stock
At September 30, 2022,2023, the Company had 500 million shares of common stock, $0.0001$0.0001 par value, authorized for issuance. Each share of common stock has the right to one vote. As of September 30, 2022,2023, the Company had 33,930,812549,199 shares of common stock outstanding. The Company has not declared or paid any dividends related to the common stock during the three or nine monthmonths ended September 30, 20222023 and 2021.2022.
Private Placement Offering
On August 4, 2022,During the Company received $1,000,000nine months ended September 30, 2023, $14.5 million of gross proceeds pursuant to an unsecured convertible promissory note (the “Bridge Note”) sold and issued to Lucro Investments VCC – ESG Opportunities Fund (“Lucro”), an affiliate of Fleur. The Bridge Note matures on February 3, 2023 (the “Maturity Date”) and does not bear interest (except in the event of a default). If the Company completes a “Qualified Financing”, the $1 million outstandingdebt principal amount of the Bridge Note will automatically convertwas converted into the type of securities offered by the Company in the Qualified Financing on the same pricing, terms and conditions as specified in the Qualified Financing. A Qualified Financing is defined as (i) the Company’s issuance and sale of288,451 shares of its equity or equity-linked securities to investors, (ii) on or before the Maturity Date, (iii) in a financing with total proceeds to the Company of at least $5,000,000 (inclusive of the conversion of the $1,000,000 Bridge Note), and (iv) which financing would result in the listing of the Company’s common stock on the Nasdaq Capital Market (“Nasdaq”).
On August 8, 2022, the Company entered into a securities purchase agreement (“SPA”) with Lucro for the private placement (the “Private Placement”) of an aggregate of 943,397 shares (the “Shares”) of the Company’s common stock and warrants exercisable for up to an additional 1,415,0951,425 shares of Common Stock (the “Warrants”). The Shares and Warrants were sold in units (the “Units”) at a fixed price of $5.30 per Unit. Each Unit consists of (i) one Share and (ii) Warrants exercisablecommon stock was issued for 1.5 shares of Common Stock.vendor services.
Each Warrant is exercisable for five years at an exercise price of $5.30 per one share of Common Stock. The holder may not exercise the Warrants to the extent that, after giving effect to such exercise, the holder would beneficially own in excess of 9.99% of the shares of Common Stock outstanding, or, at the holder’s election on not less than 61 days’ notice, 19.99%. The Warrants are exercisable for cash. If, at the time the holder exercises any Warrants, a registration statement registering the issuance of the shares of Common Stock underlying the Warrants is not then effective or available for the issuance of such shares, then the Warrants may be net exercised on a cashless basis according to a formula set forth in the Warrants. There were 1,415,905 warrants outstanding at December 31, 2022.
On August 19, 2022, the Company received $4,000,000 of gross proceeds from the Private Placement and the $1,000,000 Bridge Note was cancelled and converted into Common Stock and Warrants. The $5,000,000 was allocated between the Common Stock and Warrants purchased based on the relative fair value of these instruments. The fair value of the Common Stocks was determined using the closing price of the stock at close if the SPA and the fair value of the Warrants was determined using the Black Scholes model using the following inputs:
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Preferred Stock
At September 30, 2022,2023, the Company had 25 million shares of preferred stock, $0.0001$0.0001 par value, authorized for issuance. Preferred stock may be issued in classes or series. Designations, powers, preferences, rights, qualifications, limitations and restrictions are determined by the Company’s Board of Directors.
1316
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 |
|
| Shares |
|
| Shares |
| ||||
Series A |
|
| 750,000 |
|
|
| 48,100 |
|
|
| 750,000 |
|
|
| 48,100 |
|
Series 1A |
|
| 5,000 |
|
|
| — |
|
|
| 5,000 |
|
|
| — |
|
Series B-1 |
|
| 2,000 |
|
|
| — |
|
|
| 2,000 |
|
|
| — |
|
Series B-2 |
|
| 1,000 |
|
|
| — |
|
|
| 1,000 |
|
|
| — |
|
Series 1B |
|
| 900 |
|
|
| 900 |
| ||||||||
Series C |
|
| 1,000 |
|
|
| — |
|
|
| 1,000 |
|
|
| — |
|
Series D |
|
| 3,000 |
|
|
| — |
|
|
| 3,000 |
|
|
| — |
|
Series D-1 |
|
| 2,500 |
|
|
| — |
|
|
| 2,500 |
|
|
| — |
|
Series E |
|
| 2,800 |
|
|
| — |
|
|
| 2,800 |
|
|
| — |
|
Series F |
|
| 7,000 |
|
|
| — |
|
|
| 7,000 |
|
|
| — |
|
Series G |
|
| 2,000 |
|
|
| — |
|
|
| 2,000 |
|
|
| — |
|
Series H |
|
| 2,500 |
|
|
| — |
|
|
| 2,500 |
|
|
| — |
|
Series I |
|
| 1,000 |
|
|
| — |
|
|
| 1,000 |
|
|
| — |
|
Series J |
|
| 1,350 |
|
|
| — |
|
|
| 1,350 |
|
|
| — |
|
Series J-1 |
|
| 1,000 |
|
|
| — |
|
|
| 1,000 |
|
|
| — |
|
Series K |
|
| 20,000 |
|
|
| — |
|
|
| 20,000 |
|
|
| — |
|
Warrants
As of September 30, 2023, there are 396,576 outstanding warrants with exercise prices between $25.36 and $1,060 per share.
Series A Preferred Stock
Refer to Note 11 for Series A Preferred Stock activity.
Series 1A Preferred Stock
Refer to Note 12 for information on Series A Preferred Stock.
Series 1B Preferred Stock
Refer to Note 13 for information on Series 1B Preferred Stock.
Series 1A, Preferred Stock activity.
Series B-1, B-2, C, D, D-1, E, F, G, H, I, J, J-1, and K Preferred Stock
There were no transactions involving the Series 1A, B-1, B-2, C, D, D-1, E, F, G, H, I, J, J-1, or K during the three and nine months ended September 30, 2022 and 2021.2023.
NOTE 14.15. SHARE-BASED COMPENSATION
On September 21,In 2022, the Company’s board of directors appointed Jeffrey Max as the Company’s new Chief Executive Officer. As part of his employment agreement, the Company granted Mr. Max an inducement grant of restricted stock units (“RSUs”) for an aggregateto its Chief Executive Officer and Chief Financial Officer. On April 26, 2023, the Company terminated its employment contract with the Company's then Chief Executive Officer resulting in the forfeiture of 3,534,59111,389 restricted stock units. The remaining non-vested shares of Ascent’s common stock. 20% of the RSUs are fully vested upon grant. The remaining 80% of the RSUs vests in equal monthly increments over the next 36 months. Any outstanding and unvested RSUs will accelerate and fully vest upon the earlier of (i) a change of control and (ii) the termination of Mr. Max’s employment for any reason other than (x) by the Company for cause or (y) by Mr. Max without good reason.
The estimated fair value of the restricted stock unit is $5.37, the closing price at grant date. As2,100 units as of September 30, 2022, approximately 707,000 shares vested under this agreement and2023 are expected to vest in the Company recognized approximately $3,796,000 in share-based compensation expense during the three months ended September 30, 2022. The RSUs will settle in eight equal increments on the last business day of each calendar quarter beginning with the initial settlement date of September 30, 2024. As of September 30, 2022, totalfuture. Total unrecognized share-based compensation expense from the remaining unvested restricted stock as of September 30, 2023 was approximately $15,185,000 (or approximately 2,828,000 shares)$1,251,600 and willis expected to berecognized over 27 months. The Company recognized share-based compensation expense related to restricted stock grants of $139,067 and $2,104,378 for the remaining vesting periodthree and nine months ended September 30, 2023. The following table summarizes non-vested restricted stock and the related activity as of 36 months. September 30, 2023:
17
|
| Shares |
|
| Weighted Average Grant Date Fair Value |
| ||
Non-vested at January 1, 2023 |
|
| 15,760 |
|
|
| 989.08 |
|
Vested |
|
| 2,271 |
|
|
| 926.66 |
|
Forfeited |
|
| 11,389 |
|
|
| 1,074.00 |
|
Non-vested at September 30, 2023 |
|
| 2,100 |
|
|
| 596.00 |
|
NOTE 15.16. COMMITMENTS AND CONTINGENCIES
On September 21, 2022,April 26, 2023, the Company and Mr. Lee entered into a Separation Agreement and Releaseboard of Claims September 21, 2022 (the “Separation Agreement”). Under the Separation Agreement Mr. Lee is entitled, subject to his non-revocation of a general release of claims in favordirectors of the Company to the following separation benefits: (i) payment of twelve (12) months’ salary equal to $360,000 , which amount shall be payable in accordance withterminated Jeffrey Max as the Company’s customary payroll
14
practicesrestricted stock units. Management believes Mr. Max was terminated for cause and regular payroll time periods as in effect from time to time; (ii)any such claims, if asserted, would be without substantial merit. Although the outcome of any legal proceedings is uncertain, the Company will payvigorously defend any future claims made by Mr. Lee’s $200,000 declared but unpaid cash bonus in two installments; and (iii)Max.
On August 15, 2023, H.C. Wainwright & Co., LLC (“Wainwright”) filed an action against the Company shall pay COBRA premiums atin the New York State Supreme Court in New York County. The complaint alleges a breach by the Company of an investment banking engagement letter entered into in October 2021. The Wainwright engagement letter expired in April 2022 without any financing transaction having been completed. The complaint claims that Wainright is entitled, under a “tail provision”, to an 8% fee and 7% warrant coverage on the Company’s current contribution level for$15 million secured convertible note financing. The complaint seeks damages of $1.2 million, 2,169.5 common stock warrants with a per share exercise price of $605, and attorney fees. While it is too early to predict the next 12 months. The Company accrued liabilitiesoutcome of approximately $590,000 included in Accrued Expensesthis legal proceeding or whether an adverse result would have a material adverse impact on the Condense Consolidated Balance Sheet as of September 30, 2022. our operations or financial position, we believe we have meritorious defenses and intend to defend this legal matter vigorously.
The Company is subject to various legal proceedings, both asserted and unasserted, that arise in the ordinary course of business. The Company cannot predict the ultimate outcome of such legal proceedings or in certain instances provide reasonable ranges of potential losses. However, as of the date of this report, the Company believes that none of these claims will have a material adverse effect on its consolidated financial position or results of operations. In the event of unexpected subsequent developments and given the inherent unpredictability of these legal proceedings, there can be no assurance that the Company’s assessment of any claim will reflect the ultimate outcome, and an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Company’s consolidated financial position or results of operations in particular quarterly or annual periods.
NOTE 16.17. SUBSEQUENT EVENTS
There were no events subsequentOn September 28, 2023, the Company entered into a placement agency agreement (the “Placement Agent Agreement”) with Dawson James Securities Inc. (“Dawson James”) pursuant to September 30, 2022which the Company engaged Dawson James as the placement agent for a registered public offering by the Company (the “Offering”), of an aggregate of 3,572,635 units (“Units”) at a price of $2.88 per Unit, for gross proceeds of approximately $10.3 million, before deducting offering expenses.
Each Unit is comprised of (i) one share of common stock or, in lieu of common stock, one prefunded warrant to report aspurchase a share of this filingcommon stock, and (ii) one common warrant to purchase a share of common stock. The prefunded warrants are immediately exercisable at a price of $0.0001 per share of common stock and only expire when such prefunded warrants are fully exercised. The common warrants are immediately exercisable at a price of $2.88 per share of common stock and will expire five years from the date of issuance.
The Company agreed to pay Dawson James a placement agent fee in cash equal to 8.00% of the gross proceeds from the sale of the Units. The Company also agreed to reimburse Dawson James for all reasonable travel and other out-of-pocket expenses, including the reasonable fees of legal counsel, not to exceed $155,000.
The Offering closed on November 10, 2022.October 2, 2023 and, in the Offering, the Company issued (i) 389,024 common shares, (ii) 3,183,611 prefunded warrants, and (iii) 3,572,635 common warrants.
1518
The Company used a portion of the proceeds from the Offering to retire approximately $5,212 thousand of the outstanding conversion amount payable related to the Company’s secured convertible notes and all $900 thousand of the Company’s outstanding Series 1B Preferred Stock.
Subsequent to September 30, 2023, 2,468,500 of the pre-funded warrants were exercised into common stock.
The terms of the Offering triggered certain further adjustments to the Advance Notes and the Warrants in accordance with the existing terms of the outstanding Advance Notes and the outstanding Warrants. Following these further adjustments in October 2023:
19
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 and our audited financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021,2022 which was filed with the SEC on March 14, 2022.10, 2023. This discussion and analysis contains statements of a forward-looking nature relating to future events or our future financial performance. As a result of many factors, our actual results may differ materially from those anticipated in these forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should carefully read the “Risk Factors” section of this Quarterly Report and of our Annual Report on Form 10-K for the year ended December 31, 20212022 to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Please also see the section entitled “Forward-Looking Statements.”
Overview
We target high-volume production and high-value specialty solar markets. These include agrivoltaics, space, aerospace and high-value niche manufacturing/construction sectors. This strategy enables us to fully leverage what we believe are the unique advantages of our technology, including flexibility, durability and attractive power to weight and power to area performance. It further enables us to offer unique, differentiated solutions in large markets with less competition, and more attractive pricing.
Specifically, we focus on commercializing our proprietary solar technology in two high-value PV verticals:
I. Aerospace: Space, Near-space and Fixed Wing UAV
II. Agrivoltaics
We believe the value proposition of Ascent’s proprietary solar technology not only aligns with the needs of customers in these verticals, but also overcomes many of the obstacles other solar technologies face in these unique markets. Ascent has the capability to design and 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 airships and fixed-wing UAVs. Ascent sees significant overlap in the needs of end users across some of these verticals and believes it can achieve economies of scale in sourcing, development, and production in commercializing products for these customers.
The integration of Ascent's solar modules into space, near space, and aeronautic vehicles with ultra-lightweight and flexible solar modules is an important market opportunity for the Company. Customers in this market have historically required a high level of durability, high voltage and conversion efficiency from solar module suppliers, and we believe our products are well suited to compete in this premium market.
For the nine months ended September 30, 2022,2023, we generated $1,210,125455,480 of total revenue. As of September 30, 2022,2023, we had an accumulated deficit of $442,303,388.
In March 2018, we collaborated with a European based customer for their lighter-than-air, helium-filled airship project, which was based on our newly developed ultra-light modules with substrate material that was half of the thickness of our standard modules. In 2019, we completed a repeat order from the same customer who had since established its airship development operation in the US. In 2020, we received a third and enlarged order from the same customer and completed the order in the second quarter of 2021. Most recently, in the 4th quarter of 2021 we received a fourth order that was fulfilled during the 2nd quarter of 2022.
On September 15, 2021, the Company entered into a Long-Term Supply and Joint Development Agreement (“JDA”) with TubeSolar, a significant existing stakeholder in the Company. See “Principal Stockholders,” and “Certain Transactions.” Under the terms of the JDA, the Company will produce, and TubeSolar will purchase, thin-film PV foils (“PV Foils”) for use in TubeSolar’s solar modules for agricultural photovoltaic (“APV”) applications that require solar foils for its production. Under the JDA, the Company will receive (i) up to $4 million of non-recurring engineering (“NRE”) fees, (ii) up to $13.5 million of payments upon achievement of certain agreed upon production and cost structure milestones, and (iii) product revenues from sales of PV Foils to TubeSolar. The JDA has no fixed term, and may only be terminated by either party for breach.
16
Table of Contents$470,987,945.
The Company and TubeSolar have also jointly established a subsidiary company in Germany, in which TubeSolar holds a minority stake of 30% (the “JV”). The purpose of the JV is to establish and operate a PV manufacturing facility in Germany that will produce and deliver PV Foils exclusively to TubeSolar. Until the JV facility is fully operational, PV Foils will be manufactured in the Company’s existing facility in Thornton, Colorado. The parties expect to jointly develop next generation tooling for use in manufacturing PV Foils at the JV facility. The Company purchased 17,500 shares of the JV for 1 Euro per share, on November 10, 2021.
Due to the high durability enabled by the monolithic integration employed by our technology, the capability to customize modules into different form factors and what we believe is the industry leading light weight and flexibility provided by our modules, we believe that the potential applications for our products are extensive, including integrated solutions anywhere that may need power generation such as vehicles in space or in flight, or dual-use installations on agricultural land.
20
Commercialization and Manufacturing Strategy
We manufacture our products by affixing a thin CIGS layer to a flexible, plastic substrate using a large format, roll-to-roll process that permits us to fabricate our flexible PV modules in an integrated sequential operation. We use proprietary monolithic integration techniques which enable us to form complete PV modules with little to no back-end assembly cost of inter- 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. All tooling necessary for us to meet our near-term production requirements is installed in our Thornton, Colorado plant.
We plan to continue the development of our current PV technology to increase module efficiency, improve our manufacturing tooling and process capabilities and reduce manufacturing costs. We also plan to continue to take advantage of research and development contracts to fund a portion of this development.
In March, 2023, the Company redeployed its Thornton manufacturing facility to focus on industrial commercialization of the Company's patent-pending Perovskite solar technologies. In April 2023, the Company purchased manufacturing assets in Zurich, Switzerland with plans to commence manufacturing using this equipment; however, in June 2023, Management exercised its put option on the equipment to sell it to Affiliates and is planning to restart production at its Thornton facility.
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:
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1721
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Basis of Presentation: The accompanying unaudited condensed consolidated financial statements have been derived from the accounting records of Ascent Solar Technologies, Inc. as of September 30, 20222023 and December 31, 2021,2022, and the results of operations for the three and nine months ended September 30, 20222023 and 2021. Ascent Solar (Asia) Pte. Ltd., a wholly owned by Ascent Solar Technologies, Inc., was closed in 2022. All significant inter-company balances and transactions have been eliminated in the accompanying condensed consolidated financial statements.
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, 2021. There2022. Except for the adoption of ASU 2020-06, there have been no significant changes to our accounting policies as of September 30, 2022.2023.
Results of Operations
Comparison of the Three Months Ended September 30, 20222023 and 20212022
|
| Three Months Ended September 30, |
|
|
|
|
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| Three Months Ended |
|
|
|
| |||||||||||
|
| 2022 |
|
| 2021 |
|
| $ Change |
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| 2023 |
|
| 2022 |
|
| $ Change |
| ||||||
Revenues |
|
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| |||||
Products |
| $ | 6,344 |
|
| $ | 11,723 |
|
| $ | (5,379 | ) |
| $ | 209,496 |
|
| $ | 6,344 |
|
| $ | 203,152 |
|
Milestone and engineering |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 20,458 |
|
|
| - |
|
|
| 20,458 |
|
Total Revenues |
|
| 6,344 |
|
|
| 11,723 |
|
|
| (5,379 | ) |
|
| 229,954 |
|
|
| 6,344 |
|
|
| 223,610 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Costs and Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Cost of Revenue |
|
| 409,819 |
|
|
| 687,885 |
|
|
| (278,066 | ) |
|
| 692,752 |
|
|
| 409,819 |
|
|
| 282,933 |
|
Research, development and manufacturing operations |
|
| 1,540,170 |
|
|
| 1,086,513 |
|
|
| 453,657 |
|
|
| 344,942 |
|
|
| 1,540,170 |
|
|
| (1,195,228 | ) |
Selling, general and administrative |
|
| 1,890,218 |
|
|
| 882,641 |
|
|
| 1,007,577 |
|
|
| 1,407,493 |
|
|
| 1,890,218 |
|
|
| (482,725 | ) |
Share-based compensation |
|
| 3,796,151 |
|
|
| - |
|
|
| 3,796,151 |
|
|
| 139,067 |
|
|
| 3,796,151 |
|
|
| (3,657,084 | ) |
Depreciation and amortization |
|
| 20,497 |
|
|
| 15,111 |
|
|
| 5,386 |
|
|
| 23,723 |
|
|
| 20,497 |
|
|
| 3,226 |
|
Total Costs and Expenses |
|
| 7,656,855 |
|
|
| 2,672,150 |
|
|
| 4,984,705 |
|
|
| 2,607,977 |
|
|
| 7,656,855 |
|
|
| (5,048,878 | ) |
Loss From Operations |
|
| (7,650,511 | ) |
|
| (2,660,427 | ) |
|
| (4,990,084 | ) |
|
| (2,378,023 | ) |
|
| (7,650,511 | ) |
|
| 5,272,488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Other Income/(Expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Other income/(expense), net |
|
| 20,000 |
|
|
| 67,644 |
|
|
| (47,644 | ) |
|
| 756,859 |
|
|
| 20,000 |
|
|
| 736,859 |
|
Interest Expense |
|
| (252,571 | ) |
|
| (167,983 | ) |
|
| (84,588 | ) |
|
| (288,109 | ) |
|
| (252,571 | ) |
|
| (35,538 | ) |
Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities |
|
| - |
|
|
| 195,852 |
|
|
| (195,852 | ) | ||||||||||||
Total Other Income/(Expense) |
|
| (232,571 | ) |
|
| 95,513 |
|
|
| (328,084 | ) |
|
| 468,750 |
|
|
| (232,571 | ) |
|
| 701,321 |
|
Income/(Loss) on Equity Method Investments |
|
| (27,484 | ) |
|
| - |
|
|
| (27,484 | ) |
|
| - |
|
|
| (27,484 | ) |
|
| 27,484 |
|
Net (Loss)/Income |
| $ | (7,910,566 | ) |
| $ | (2,564,914 | ) |
| $ | (5,345,652 | ) |
| $ | (1,909,273 | ) |
| $ | (7,910,566 | ) |
| $ | 6,001,293 |
|
18
Comparison of the Three Months Ended September 30, 2022 and 2021
Total Revenues. Our total revenues decreased slightlyincreased by $5,379,$223,610, or 46%100%, for the three months ended September 30, 20222023 when compared to the same period in 2021.2022. Increase is primarily due to revenue generated from fulfilling a supply agreement obligation for one of Flisom's customers acquired as part of the Flisom asset acquisition and increased nonrecurring engineering fees.
Cost of revenue. Cost of revenues is primarily comprised of repair and maintenance, material costs, and direct labor and manufacturing overhead expenses. Our Cost of revenues increased by $282,933, or 69%, for the three months ended September 30, 2023 when compared to the same period in 2022. Increase in cost of revenue is primarily due to expenses incurred from our asset acquisition of Flisom's manufacturing equipment and related costs partially offset by the decrease in production costs with the redeployment of the Thornton facility as a Perovskite research facility.
22
Research, development and manufacturing operations. Research, development and manufacturing operations costs include costs incurred for product development and pre-production activities in our manufacturing facility. It also includes costs related to technology development. Research, development and manufacturing operations costs decreased by $1,195,228, or 78%, for the three months ended September 30, 2023 when compared to the same period in 2022. This is primarily due to a decrease in manufacturing operations cost, as the Company redeployed its Thornton manufacturing facility as a perovskite research facility.
Selling,general and administrative. Selling, general and administrative expenses decreased by $482,725, or 26%, for the three months ended September 30, 2023 when compared to the same period in 2022. The decrease in costs is due primarily to a one-time termination expense of approximately $500,000 recognized with the departure of our former CEO in the prior period.
Share-based compensation. Share-based compensation expense decreased by $3,657,084 or 96% for the three months ended September 30, 2023 when compared to the same period in 2022. The decrease is primarily due to the employment termination of former CEO on April 26, 2023. The prior period expense also includes the immediate vesting of 20% of the former CEO's restricted stock units.
Other Income/Expense. Other income was $468,750 for the three months ended September 30, 2023, compared to other expense of $232,571 for the same period in 2022, an increase of $701,321. The increase is due primarily to a one-time employment retention credit received and a gain on lease modification, partially offset by an asset disposal.
Net Loss. Our Net Loss decreased by $6,001,293, or 76%, for the three months ended September 30, 2023 compared to the same period in 2022 due primarily to the items mentioned above.
Comparison of the Nine Months Ended September 30, 2023 and 2022
|
| Nine Months Ended |
|
|
|
| ||||||
|
| 2023 |
|
| 2022 |
|
| $ Change |
| |||
Revenues |
|
|
|
|
|
|
|
|
| |||
Product Revenue |
| $ | 395,106 |
|
| $ | 688,125 |
|
| $ | (293,019 | ) |
Milestone and engineering |
|
| 60,374 |
|
|
| 522,000 |
|
|
| (461,626 | ) |
Total Revenues |
|
| 455,480 |
|
|
| 1,210,125 |
|
|
| (754,645 | ) |
|
|
|
|
|
|
|
|
| ||||
Costs and Expenses |
|
|
|
|
|
|
|
|
| |||
Cost of Revenue |
|
| 1,820,816 |
|
|
| 1,519,703 |
|
|
| 301,113 |
|
Research, development and |
|
| 2,832,956 |
|
|
| 4,399,765 |
|
|
| (1,566,809 | ) |
Selling, general and administrative |
|
| 4,178,146 |
|
|
| 3,583,366 |
|
|
| 594,780 |
|
Share-based compensation |
|
| 2,104,378 |
|
|
| 3,796,151 |
|
|
| (1,691,773 | ) |
Depreciation and amortization |
|
| 73,947 |
|
|
| 54,998 |
|
|
| 18,949 |
|
Total Costs and Expenses |
|
| 11,010,243 |
|
|
| 13,353,983 |
|
|
| (2,343,740 | ) |
Loss From Operations |
|
| (10,554,763 | ) |
|
| (12,143,858 | ) |
|
| 1,589,095 |
|
|
|
|
|
|
|
|
|
| ||||
Other Income/(Expense) |
|
|
|
|
|
|
|
|
| |||
Other Income/(Expense), net |
|
| 766,859 |
|
|
| 22,000 |
|
|
| 744,859 |
|
Interest Expense |
|
| (2,118,023 | ) |
|
| (2,371,256 | ) |
|
| 253,233 |
|
Total Other Income/(Expense) |
|
| (1,351,164 | ) |
|
| (2,349,256 | ) |
|
| 998,092 |
|
Income/(Loss) on Equity Method Investments |
|
| (170 | ) |
|
| (27,486 | ) |
|
| 27,316 |
|
Net (Loss)/Income |
| $ | (11,906,097 | ) |
| $ | (14,520,600 | ) |
| $ | 2,614,503 |
|
Total Revenues. Our total revenues decreased by $754,645, or 62%, for the nine months ended September 30, 2023 when compared to the same period in 2022. This is primarily due to a large customer order in the prior period that was not repeated in the current period, partially offset by product revenue earned from fulfilling a supply agreement obligation under the Asset Purchase Agreement. Additionally, the Company recognized $512,000 in engineering revenue from TubeSolar in the prior period which was not repeated in the current period.
23
Cost of revenue. Cost of revenues is primarily comprised of repair and maintenance, material costs, and direct labor and overhead expenses. Our Cost of revenues decreasedincreased by $278,066,$301,113, or 40%20%, for the threenine months ended September 30, 20222023 when compared to the same period in 2021. This2022.The increase is primarily due primarily to expenses from our asset acquisition of Flisom's manufacturing equipment and employee contracts, partially offset by a reduction in production costs by redeploying the decrease in repair and maintenance in the current period when compared to the same period in 2021. In late 2021, the Company incurred significant repair and maintenance costs to restart itsCompany's manufacturing equipment. Management believes our factory is significantly under-utilized, andfacilities as a substantial increase in revenue would result in marginal increases to Direct Labor and Overhead included in the Cost of revenues. As such management’s continued focus going forward is to improve gross margin through increased sales and improved utilization of our factory.perovskite research facility.
Research, development and manufacturing operations. Research, development and manufacturing operations costs include costs incurred for product development pre-production and productionpre-production activities in our manufacturing facility. Research, development and manufacturing operations costs also include costs related to technology development. Research, development and manufacturing operations costs increaseddecreased by $453,657,$1,566,809, or 42%36%, for the threenine months ended September 30, 20222023 when compared to the same period in 2021.2022. This is primarily due primarily to an increasea decrease in personnel and other operating costsmanufacturing operations cost, as the Company redeployed its Thornton manufacturing facility as a result of increased level of operations in the current period as compared to the Company’s restart status in the same period in 2021.perovskite research facility.
Selling, general and administrative. Selling, general and administrative expenses increased by $1,007,577,$594,780, or 114%,17% for the threenine months ended September 30, 20222023 when compared to the same period in 2021. The increase in costs is due primarily to a one-time termination expense of approximately $500,000 recognized with the departure of our former CEO and increased administrative costs.
Share-based compensation. Share-based compensation expense increased by $3,796,151 or 100% for the three months ended September 30, 2022 when compared to the same period in 2021. The increase is due to the employment agreement between the Company and the new CEO for vested restricted stock units.
Other Income/Expense. Other expense was $232,571 for the three months ended September 30, 2022, compared to other income of $95,513 for the same period in 2021, a decline of $328,084. The decline is due primarily to a one time gain recognized in 2021 not repeated in 2022, partially offset by an increase in interest expense due to the convertible debt conversions and the accelerated recognition of debt discount.
Net Loss. Our Net Loss increased by $5,345,652, or 208%, for the three months ended September 30, 2022 compared to the same period in 2021 due primarily to the items mentioned above.
19
Comparison of the nine months ended September 30, 2022 and 2021
|
| Nine Months Ended September 30, |
|
|
|
|
| |||||
|
| 2022 |
|
| 2021 |
|
| $ Change |
| |||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Product Revenue |
| $ | 688,125 |
|
| $ | 557,369 |
|
| $ | 130,756 |
|
Milestone and engineering |
|
| 522,000 |
|
|
| - |
|
|
| 522,000 |
|
Total Revenues |
|
| 1,210,125 |
|
|
| 557,369 |
|
|
| 652,756 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Revenue |
|
| 1,519,703 |
|
|
| 1,184,528 |
|
|
| 335,175 |
|
Research, development and manufacturing operations |
|
| 4,399,765 |
|
|
| 2,716,395 |
|
|
| 1,683,370 |
|
Selling, general and administrative |
|
| 3,583,366 |
|
|
| 2,244,771 |
|
|
| 1,338,595 |
|
Share-based compensation |
|
| 3,796,151 |
|
|
| - |
|
|
| 3,796,151 |
|
Depreciation and amortization |
|
| 54,998 |
|
|
| 40,047 |
|
|
| 14,951 |
|
Total Costs and Expenses |
|
| 13,353,983 |
|
|
| 6,185,741 |
|
|
| 7,168,242 |
|
Loss From Operations |
|
| (12,143,858 | ) |
|
| (5,628,372 | ) |
|
| (6,515,486 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income/(Expense) |
|
|
|
|
|
|
|
|
|
|
|
|
Other Income/(Expense), net |
|
| 22,000 |
|
|
| 68,443 |
|
|
| (46,443 | ) |
Interest Expense |
|
| (2,371,256 | ) |
|
| (899,533 | ) |
|
| (1,471,723 | ) |
Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities |
|
| - |
|
|
| 4,047,993 |
|
|
| (4,047,993 | ) |
Total Other Income/(Expense) |
|
| (2,349,256 | ) |
|
| 3,216,903 |
|
|
| (5,566,159 | ) |
Income/(Loss) on Equity Method Investments |
|
| (27,486 | ) |
|
| - |
|
|
| (27,486 | ) |
Net (Loss)/Income |
| $ | (14,520,600 | ) |
| $ | (2,411,469 | ) |
| $ | (12,109,131 | ) |
Comparison of the nine months ended September 30, 2022 and 2021
Total Revenues. Our total revenues increased by $652,756, or 117%, for the nine months ended September 30, 2022 when compared to the same period in 2021, due primarily to the increased order from a repeat customer and NRE fees from TubeSolar in the current period.
Cost of revenue. Cost of revenues is primarily comprised of repair and maintenance, direct labor, and overhead expenses. Our Cost of revenues increased by $335,175, or 28%, for the nine months ended September 30, 2022 when compared to the same period in 2021. This is due primarily to the increase in repair and maintenance, materials and freight, personnel, and other operating costs as a result of an increase in operations during the nine months ended September 30, 2022 when compared to the same period in 2021. Management believes our factory is significantly under-utilized, and a substantial increase in revenue would result in marginal increases to Direct Labor and Overhead included in the Cost of revenues. As such management’s continued focus going forward is to improve gross margin through increased sales and improved utilization of our factory.
Research, development and manufacturing operations. Research, development and manufacturing operations costs include costs incurred for product development, pre-production and production activities in our manufacturing facility. Research, development and manufacturing operations costs also include costs related to technology development. Research, development and manufacturing operations costs increased by $1,683,370, or 62%, for the nine months ended September 30, 2022 when compared to the same period in 2021. This is due primarily to an increase in repair and maintenance, personnel and other operating costs as a result of increased level of operations in the current period as compared to the Company’s restart status in the same period in 2021.
Selling,general and administrative. Selling, general and administrative expenses increased by $1,338,595, or 60%, for the nine months ended September 30, 2022 when compared to the same period in 2021.2022. The increase in costs is due primarily to increased professional services and other administrative costs in the current period as compared to the Company’s restart status in the same period in 2021.expenses.
20
Additionally, the Company incurred a one-time termination expense of approximately $500,000 recognized with the departure of our former CEO in the current period and increased administrative costs.
Share-based compensation. Share-based compensation expense increaseddecreased by $3,796,151$1,691,773 or 100%45% for the threenine months ended September 30, 20222023 when compared to the same period in 2021.2022. The increasedecrease is primarily due primarily to the employment agreement betweentermination of former CEO on April 26, 2023. The prior period expense also includes the Company andimmediate vesting of 20% of the new CEO for vestedformer CEO's restricted stock units.
Other Income/Expense. Other expense was $2,349,256$1,351,164 for the nine months ended September 30, 2022, compare2023, compared to other incomeexpense of $3,216,903 in$2,349,256 for the same period 2021,in 2022, a declinedecrease of $5,566,159.$998,092. The decline is due primarily to a one-time employment retention credit received and a gain fromon lease modification. Additionally, the change in fair value of derivative liabilities recognizedCompany recording accelerating debt discount as interest expense in the prior period and not repeated inyear. With the current period, and additionally, as a resultadoption of ASU 2020-06, the Company accelerating the amortization of approximately $2 million in convertibleaccelerated debt discount and recognizing it as interest expense upon conversion of certain notes to equityis now recorded in the current period. stockholders' equity.
Net Loss. Our Net Loss was $14,520,600decreased by $2,614,503, or 18%, for the nine months ended September 30, 2022,2023 compared to Net Loss of $2,411,469 in the same period in 2021, a decline of $12,109,131. The decline is2022 due primarily to the items mentioned above.
Liquidity and Capital Resources
TheIn March, 2023, the Company has continued limited PVredeployed its Thornton facilities from a manufacturing facility to a research and development facility. In April 2023, the Company purchased manufacturing assets in Zurich, Switzerland with plans to commence manufacturing using this equipment; however, in June 2023, Management exercised its put option on the equipment and is planning to restart production at its manufacturingThornton facility. The CompanyManagement does not expect that sales revenue and cash flows will be sufficient to support operations and cash requirements until it has fully implemented its product strategy.the Company is able to achieve large-scale production capacities. During the nine months ended September 30, 20222023 the Company used $7,925,786$7,329,398 in cash for operations.
AdditionalAdditionally, projected total revenues are not anticipated to result in a positive cash flow position for the year overall and, as of September 30, 2022,2023, the Company has working capital deficit of $59,948.$8,726,319. As such, cash liquidity would not be sufficient for the next twelve months and will require additional financing.
The Company has begun activities related to securing additional financing through strategic or financial investors and has closed on an equity offering on October 2, 2023, but there is no assurance the Company will be able to continue to raise additional capital on acceptable terms or at all. If the Company’s revenues do not increase rapidly, and/or additional financing is not obtained, the Company will be required to significantly curtail operations to reduce costs and/or sell assets. Such actions would likely have an adverse impact on the Company's future operations.
As a result of the Company’s recurring losses from operations, and the need for additional financing to fund its operating and capital requirements, there is uncertainty regarding the Company’s ability to maintain liquidity sufficient to operate its business effectively, which raises doubt as to the Company’s ability to continue as a going concern.
Management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. These unaudited condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.
24
Statements of Cash Flows Comparison of the Nine Months Ended September 30, 20222023 and 20212022
For the nine months ended September 30, 2022,2023, our cash used in operations was $7,925,786$7,329,398 compared to $6,227,813$7,925,786 for the nine months ended September 30, 2021, an increase2022, a decrease of $1,697,973. The increase$596,388. This decrease is due primarily to the scaling updecreased Company expenses and revenue and timing of operations during the current period as compared to the Company’s restart status in the 2021 nine months period.cash outflows. For the nine months ended September 30, 2022,2023, cash used in investing activities was $185,703$3,863,963 compared to $96,738$185,703 used in investing activities for the nine months ended September 30, 2021.2022. This change was due primarily to the Company investingresult of the asset acquisition in Ascent Germany and purchasing new PP&E in the current period.Zurich, Switzerland. During the nine months ended September 30, 2022,2023, net cash used in operations of $7,925,786$7,329,398 were primarily funded through the proceeds from issuances of preferred and common stock during 2022 and 2021.
21
Table of Contentsfinancing agreements.
Off Balance Sheet Transactions
As of September 30, 2022,2023, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of 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 requirementrequirements 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 no significant future obligations denominated in foreign currencies as of September 30, 2022.
Although our reporting currency is the U.S. Dollar, we may conduct business and incur costs in the local currencies of other countries in which we may operate, make sales and buy materials. As a result, we are subject to currency translation risk. Further, changes in exchange rates between foreign currencies and the U.S. Dollar could affect our future net sales and cost of sales and could result in exchange losses.
We currently do not engage in hedging transactions to reduce our exposure to changes in currency exchange rates, although, we may do so in the future.
We hold no significant funds denominated in foreign currencies as of September 30, 2023.
Interest Rate Risk
Our exposure to market risks for changes in interest rates relates primarily to our cash equivalents and investment portfolio. As of September 30, 2022,2023, our cash equivalents consisted only of operating 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 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 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 rules and forms. Our disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information
25
required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosures. Our management conducted an evaluation required by Rules 13a-15 and 15d-15 under the Exchange Act of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15 and 15d-15 under the Exchange Act as of September 30, 2022.2023. Based on this evaluation, our management concluded the design and operation of our disclosure controls and procedures were effective as of September 30, 2022.2023.
Changes in Internal Control Over Financial Reporting
There were no changes in internal control over financial reporting during the nine months ended September 30, 20222023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
2226
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. We are not currently awareExcept as discussed in Note 16 to the financial statements, there were no events required to be reported under Item 1for the three months ended September 30, 2023, within Part II, Item 1 of any such proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or results of operations.this report.
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 information set forth in this Form 10-Q, you should carefully consider the 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, 2021. There2022. Except as set forth below, there have been no material changes to our risk factors from those included in our Annual Report on Form 10-K for the year ended December 31, 2021.2022.
We may not be able to maintain our current listing for our common stock on the Nasdaq Capital Market. Failure to maintain the listing of our common stock on Nasdaq could adversely affect the liquidity of our common stock.
Our inability to maintain our current listing on Nasdaq may limit the liquidity of our stock, increase its volatility, and hinder our ability to raise capital. If our common stock is delisted by Nasdaq, our common stock may be eligible for quotation on an over-the-counter quotation system or on the pink sheets. Upon any such delisting, our common stock would become subject to the regulations of the SEC relating to the market for penny stocks. A penny stock is any equity security not traded on a national securities exchange that has a market price of less than $5.00 per share. The regulations applicable to penny stocks may severely affect the market liquidity for our common stock and could limit the ability of shareholders to sell securities in the secondary market. In such a case, an investor may find it more difficult to dispose of or obtain accurate quotations as to the market value of our common stock, and there can be no assurance that our common stock will be eligible for trading or quotation on any alternative exchanges or markets.
Delisting from Nasdaq could adversely affect our ability to raise additional financing through public or private sales of equity securities, would significantly affect the ability of investors to trade our securities and would negatively affect the value and liquidity of our common stock. Delisting could also have other negative results, including the potential loss of confidence by employees, the loss of institutional investor interest and fewer business development opportunities.
On March 23, 2023 the Company received a written notice (the “Notice”) from the Listing Qualifications Department of Nasdaq indicating that the Company was not in compliance with the $1.00 Minimum Bid Price requirement set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on The Nasdaq Capital Market (the “Bid Price Requirement”). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company was provided 180 calendar days to regain compliance with the Bid Price Requirement.
On July 28, 2023, the Company received notice (the “Second Notice”) that Nasdaq had determined that the Company’s common stock had a closing bid price of $0.10 or less for ten consecutive trading days triggering application of Listing Rule 5810(c)(3)(A)(iii) which states in part: if during any compliance period specified in Rule 5810(c)(3)(A), a company’s security has a closing bid price of $0.10 or less for ten consecutive trading days, the Listing Qualifications Department shall issue a Staff Delisting Determination under Rule 5810 with respect to that security (the “Low Priced Stocks Rule”). As a result, the Nasdaq staff determined to delist the Company’s common stock from Nasdaq, unless the Company timely requests an appeal of the staff’s determination to a Hearings Panel (the “Panel”), pursuant to the procedures set forth in the Nasdaq Listing Rule 5800 Series.
In addition, Nasdaq Listing Rule 5550(b)(1) (the “Stockholders’ Equity Rule”) requires companies listed on Nasdaq to maintain a minimum of $2,500,000 in stockholders’ equity for continued listing. On May 25, 2023, we received a letter from Nasdaq indicating that we were not in compliance with the Stockholders’ Equity Rule.
On July 28, 2023, the Company received notice that Nasdaq had determined that the Company’s common stock had a closing bid price of $0.10 or less for ten consecutive trading days triggering application of Listing Rule 5810(3)(A)(iii) which states in part: if during any compliance period specified in Rule 5810(c)(3)(A), a company’s security has a closing bid price of $0.10 or less for ten consecutive trading days, the Listing Qualifications Department shall issue a Staff Delisting Determination under Rule 5810 with respect to that security (the “Low Priced Stocks Rule”). As a result, the Nasdaq staff determined to delist
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the Company’s common stock from Nasdaq, unless the Company timely requests an appeal of the staff’s determination to a Hearings Panel (the “Panel”), pursuant to the procedures set forth in the Nasdaq Listing Rule 5800 Series. The Company requested a hearing before the Panel, which was scheduled for October 12, 2023.
On September 12, 2023, the Company implemented a reverse stock split in an effort to regain compliance with the $1 minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”), and by letter dated September 29, 2023, the Company was notified by the Staff that the Company had regained compliance with the Bid Price Rule. The Staff, however, determined that, following the reverse split, the Company no longer satisfied the minimum 500,000 publicly held shares requirement set forth in Nasdaq Listing Rule 5550(a)(4) (the “Public Float Rule”).
On October 2, 2023, the Company completed a public offering of units (each unit consisting of (x) one share or one prefunded warrant and (y) one common stock warrant) for gross proceeds of $10.3 million. As a result of the offering, the Company had the minimum of $2.5 million in stockholders’ equity and has therefore regained compliance with the Equity Rule. The offering also resulted in an increase in the Company’s publicly held shares above the minimum Nasdaq threshold of 500,000 shares and as such the Company believes it has regained compliance with the Public Float Rule.
On October 11, 2023, the Company received notice from the Nasdaq Listing Qualifications staff that the Company has regained compliance with Nasdaq’s minimum $2.5 million stockholders’ equity requirement in Listing Rule 5550(b)(1) and the minimum 500,000 publicly held shares requirement under Listing Rule 5550(a)(4), and that the Company is therefore in compliance with the Nasdaq Capital Market’s listing requirements.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Not required.applicable.
Issuer Purchases of Equity Securities
We did not repurchase any of our equity securities during the nine months ended September 30, 2022.2023.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
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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 | ||
|
24
| ||
29
3.17 | ||
| ||
3.18 | ||
3.19 | ||
4.1 | ||
4.2 | ||
4.3 | ||
| ||
4.5 | ||
4.6 | ||
4.7 | ||
4.8 | ||
4.9 | ||
10.1CTR | ||
10.2 CTR | ||
10.3 | ||
10.4 CTR | ||
10.5 | ||
10.6 CTR | ||
10.7 | ||
30
10.8† | ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
25
| ||
| ||
| ||
| ||
| ||
| ||
10.16 | ||
10.17 | ||
10.18 | ||
10.19 | ||
10.20 | ||
10.21 | ||
10.22 | ||
10.23 | ||
10.24 | ||
10.25 | ||
10.26 | ||
10.27 | ||
10.28 | ||
10.29† | CEO Employment Agreement between the Company and Paul Warley dated as of May 1, 2023 | |
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10.30 | ||
10.31 | ||
10.32 | ||
10.33† | ||
10.34† | ||
31.1* | Chief Executive Officer Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2* | Chief Financial Officer Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1* | Chief Executive Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002 | |
32.2* | Chief Financial Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002 | |
101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
* | Filed herewith | |
CTR | Portions of this exhibit have been omitted pursuant to a request for confidential treatment. | |
† | Denotes management contract or compensatory plan or arrangement. | |
+ | Certain portions of the exhibit have been omitted pursuant to Rule 601(b)(10) of Regulation S-K. The omitted information is (i) not material and (ii) would likely cause competitive harm to the Company if publicly disclosed. |
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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 10th14th day of November, 2022.2023.
November | By: | /s/ |
(Principal Executive Officer) | ||
November | By: | /s/ |
Chief Financial Officer (Principal Financial and Accounting Officer) |
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