Ascent Solar Technologies, Inc 10-Q for FY2023 Q2
Ascent Solar Technologies, Inc. (ASTI)
About this 10-Q
Ascent Solar Technologies, Inc filed this 10-Q on August 9, 2023, covering the quarter ended June 30, 2023 (FY2023 Q2).
Headline figures
Quarter ended June 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $101.3K
- down 84.1% from $637.57K a year earlier
- Net loss
- $3.91M
- compared with a net loss of $2.31M a year earlier
- Diluted EPS
- -$0.33
- compared with -$0.08 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the quarterly period ended
or
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the Transition Period from to
Commission File No.
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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Registrant’s telephone number including area code:
Securities registered pursuant to Section 12(b) of the Act:
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Trading Symbol(s) |
Name of exchange on which registered |
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.
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). ☒
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 |
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Smaller reporting company |
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Emerging growth company |
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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
As of August 8, 2023, there were
ASCENT SOLAR TECHNOLOGIES, INC.
Quarterly Report on Form 10-Q
For the Period Ended June 30, 2023
Table of Contents
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Item 1. |
1 |
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Unaudited Condensed Balance Sheets - as of June 30, 2023 and December 31, 2022 |
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Unaudited Condensed Statements of Cash Flow - For the Six Months Ended June 30, 2023 and 2022 |
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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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31 |
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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:
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 Financial Statements
CONDENSED BALANCE SHEETS
(unaudited)
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June 30, |
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December 31, |
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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 |
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$ |
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$ |
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Trade receivables, net of allowance of $ |
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Inventories, net |
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Prepaid and other current assets |
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Total current assets |
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Property, Plant and Equipment: |
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Accumulated depreciation |
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Property, Plant and Equipment, net |
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Other Assets: |
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Operating lease right-of-use assets, net |
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Patents, net of accumulated amortization of $ |
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Equity method investment |
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Other non-current assets |
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Total Assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |
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Current Liabilities: |
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Accounts payable |
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Related party payables |
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Accrued expenses |
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Accrued payroll |
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Accrued professional services fees |
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Accrued interest |
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Current portion of operating lease liability |
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Conversions payable (Note 11) |
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Current portion of convertible notes, net |
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Other payable |
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Total current liabilities |
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Long-Term Liabilities: |
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Non-current operating lease liabilities |
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Non-current convertible notes, net |
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Accrued warranty liability |
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Total liabilities |
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Stockholders’ Equity (Deficit): |
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Series A preferred stock, $ |
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Common stock, $ |
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Additional paid in capital |
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Accumulated deficit |
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Accumulated other comprehensive loss |
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Total stockholders’ equity (deficit) |
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Total Liabilities and Stockholders’ Equity (Deficit) |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited condensed financial statements.
1
ASCENT SOLAR TECHNOLOGIES, INC.
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(unaudited)
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Three Months Ended |
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Six Months Ended |
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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 |
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$ |
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$ |
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$ |
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Milestone and engineering |
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Total Revenues |
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Costs and Expenses |
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Costs of revenue |
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Research, development and manufacturing |
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Selling, general and administrative |
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Share-based compensation |
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Depreciation and amortization |
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Total Costs and Expenses |
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Loss from Operations |
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Other Income/(Expense) |
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Other income/(expense), net |
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- |
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Interest expense |
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Total Other Income/(Expense) |
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Income/(Loss) on Equity Method Investments |
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- |
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Net Income/(Loss) |
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$ |
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$ |
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$ |
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$ |
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Net Income/(Loss) Per Share (Basic and Diluted) |
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$ |
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$ |
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$ |
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$ |
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Weighted Average Common Shares |
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Weighted Average Common Shares |
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Other Comprehensive Income/(Loss) |
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Foreign currency translation gain/(loss) |
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Net Comprehensive Income/(Loss) |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited condensed financial statements.
2
ASCENT SOLAR TECHNOLOGIES, INC.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
(unaudited)
For the Three and Six Months Ended June 30, 2023
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Series A |
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Series 1B |
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Common Stock |
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Additional |
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Accumulated |
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Other Accumulated Comprehensive |
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Total |
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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, 2023 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Balance at January 1, 2023, as adjusted |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Conversion of L1 Note |
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Conversion of Sabby Note into |
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Share-based compensation |
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Net Loss |
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Foreign Currency Translation |
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- |
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- |
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- |
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Balance at March 31, 2023 |
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$ |
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$ |
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$ |
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$ |
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Conversion of L1 Note |
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Conversion of Sabby Note into |
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Share-based compensation |
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Proceeds from issurance of |
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Preferred Stock issuance cost |
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Common stock issued for services |
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Down round deemed dividend |
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Net Loss |
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Foreign Currency Translation |
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Balance at June 30, 2023 |
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$ |
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$ |
- |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited condensed financial statements.
3
ASCENT SOLAR TECHNOLOGIES, INC.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(unaudited)
For the Three and Six Months Ended June 30, 2022
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Series A |
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Series 1A |
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Common Stock |
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Additional |
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Accumulated |
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Other Accumulated Comprehensive |
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Total |
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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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$ |
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$ |
- |
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$ |
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$ |
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$ |
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$ |
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Conversion of TubeSolar Series 1A |
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Conversion of Crowdex Series 1A |
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Conversion of BD1 Note |
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- |
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- |
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|
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|
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- |
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- |
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||||
Conversion of Nanyang Note |
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- |
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- |
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- |
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- |
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- |
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- |
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||||
Conversion of Fleur Note into |
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- |
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- |
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- |
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- |
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|
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- |
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- |
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||||
Net Loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
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- |
|
|
|
- |
|
|
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- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Foreign Currency Translation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
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|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Balance at March 31, 2022 |
|
|
|
|
$ |
|
|
|
- |
|
|
$ |
- |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
Net Loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Foreign Currency Translation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Balance at June 30, 2022 |
|
|
|
|
$ |
|
|
|
- |
|
|
$ |
- |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
4
ASCENT SOLAR TECHNOLOGIES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
|
|
For the Six Months Ended |
|
|||||
|
|
June 30, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Operating Activities: |
|
|
|
|
|
|
||
Net income/(loss) |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net income (loss) to cash used in operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Share-based compensation |
|
|
|
|
|
— |
|
|
Operating lease asset amortization |
|
|
|
|
|
|
||
Amortization of debt discount |
|
|
|
|
|
|
||
Loss on equity method investment |
|
|
|
|
|
|
||
Inventory reserve expense |
|
|
|
|
|
— |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
( |
) |
|
|
( |
) |
Inventories |
|
|
( |
) |
|
|
( |
) |
Prepaid expenses and other current assets |
|
|
|
|
|
( |
) |
|
Accounts payable |
|
|
|
|
|
|
||
Related party payable |
|
|
( |
) |
|
|
|
|
Operating lease liabilities |
|
|
( |
) |
|
|
( |
) |
Accrued interest |
|
|
|
|
|
|
||
Accrued expenses |
|
|
( |
) |
|
|
|
|
Net cash used in operating activities |
|
|
( |
) |
|
|
( |
) |
Investing Activities: |
|
|
|
|
|
|
||
Contributions to equity method investment |
|
|
— |
|
|
|
( |
) |
Payments on purchase of assets |
|
|
( |
) |
|
|
( |
) |
Patent activity costs |
|
|
( |
) |
|
|
( |
) |
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Financing Activities: |
|
|
|
|
|
|
||
Proceeds from issuance of Series 1B Preferred Stock |
|
|
|
|
|
— |
|
|
Payment of convertible notes |
|
|
( |
) |
|
|
— |
|
Net cash used in financing activities |
|
|
( |
) |
|
|
— |
|
Effect of foreign exchange rate on cash |
|
|
( |
) |
|
|
|
|
Net change in cash and cash equivalents |
|
|
( |
) |
|
|
( |
) |
Cash and cash equivalents at beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents at end of period |
|
$ |
|
|
$ |
|
||
Non-Cash Transactions: |
|
|
|
|
|
|
||
Right-of-use assets acquired through operating lease liabilities |
|
$ |
— |
|
|
$ |
|
|
Purchase of equipment not yet paid at end of period |
|
$ |
— |
|
|
$ |
|
|
Non-cash conversions of convertible notes to equity |
|
$ |
|
|
$ |
|
||
Series 1A preferred stock conversion |
|
$ |
— |
|
|
$ |
|
|
Down round deemed dividend |
|
$ |
|
|
$ |
— |
|
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
||
Cash paid during the year for: |
|
|
|
|
|
|
||
Interest |
|
$ |
|
|
$ |
— |
|
|
The accompanying notes are an integral part of these unaudited condensed financial statements.
5
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION
Ascent Solar Technologies, Inc. (the “Company") is focusing on integrating its photovoltaic ("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 design and develop finished products for end users in these areas as well as collaborate with strategic partners to design and develop custom integrated solutions for products like fixed-wing UAVs. Ascent sees significant overlap of the needs of end users across these industries and can achieve economies of scale in sourcing, development, and production in commericializing products for these customers.
Effective March 13, 2023, the Company redeployed its Thornton manufacturing facility as a Perovskite Center of 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. The Company will continue to be headquartered in Thornton, CO.
NOTE 2. BASIS OF PRESENTATION
The accompanying, unaudited, condensed financial statements have been derived from the accounting records of the Company as of June 30, 2023, and December 31, 2022, and the results of operations for the three and six months ended June 30, 2023, and 2022.
The accompanying, unaudited, condensed 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 Balance Sheet at December 31, 2022, 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, 2022. These condensed 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, 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 six months ended June 30, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 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, 2022. 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 June 30, 2023.
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.
6
During the three months ended June 30, 2023 and 2022, the Company recognized product revenue of $
Milestone and engineering revenue. Each milestone and engineering arrangement is a separate performance obligation. The transaction price is estimated using the most likely amount method and revenue is recognized as the performance obligation is satisfied through achieving manufacturing, cost, or engineering targets. During the three months ended June 30, 2023 and 2022, the Company recognized total milestone and engineering revenue of $
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.
Accounts Receivable. As of June 30, 2023 and December 31, 2022, the Company had an accounts receivable, net balance of $
Deferred revenue for the six months ended June 30, 2023 was as follows:
Balance as of January 1, 2023 |
$ |
|
|
Additions |
|
|
|
Recognized as revenue |
|
( |
) |
Balance as of June 30, 2023 |
$ |
|
Earnings per Share: Earnings per share (“EPS”) are the amount of earnings attributable to each share of common stock. Basic EPS has been computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding during the period. Income available to common stockholders has been computed by deducting dividends accumulated for the period on cumulative preferred stock (whether or not earned) and deemed dividends due to down round financings from net income. For the three and six months ended June 30, 2023, income available to common stockholders was adjusted for deemed dividends due to down round financings of $
Net loss attributable to common shareholders for the three and six months ended June 30, 2023 was as follows:
7
|
|
Three months ended |
|
|
Six months ended |
|
||||
|
|
June 30, 2023 |
|
|
June 30, 2023 |
|
||||
Net Loss |
|
$ |
|
( |
) |
|
$ |
|
( |
) |
Down round deemed dividend |
|
|
|
( |
) |
|
|
|
( |
) |
Net Loss attributable to common shareholders |
|
|
|
( |
) |
|
|
|
( |
) |
Earnings Per Share (Basic and Diluted) |
|
|
|
( |
) |
|
|
|
( |
) |
Recently Adopted or to be Adopted Accounting Policies
On January 1, 2023, the Company adopted ASU 2020-06. The adoption resulted in the elimination of the beneficial conversion feature recognized on the Company’s convertible debt. The Company elected to apply the modified retrospective method to all open contracts as of January 1, 2023, and the cumulative effect of initially applying ASU 2020-06 was recognized as an adjustment to the Company’s retained earnings balance as of January 1, 2023. Comparative periods have not been restated and continue to be reported under the accounting standard in effect for those periods.
The cumulative effect of the changes made to the Company’s January 1, 2023, condensed balance sheet for the adoption of ASU 2020-06 is as follows:
|
|
Balance at December 31, 2022 |
|
|
Adjustments Due to Adoption |
|
|
Balance at January 1, 2023 |
|
||||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Non-current convertible notes, net |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|||
Shareholders' equity |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Additional paid in capital |
|
|
|
|
|
|
|
( |
) |
|
|
|
|
||
Accumulated deficit |
|
|
|
( |
) |
|
|
|
|
|
|
|
( |
) |
|
The impact due to the change in accounting principle on net income and earnings per share for the three and six months ended June 30, 2023 is as follows:
|
|
Post ASU 2020-06 |
|
|
Pre ASU 2020-06 |
|
|
Difference |
|
||||||
Three months ended June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Net Loss |
|
$ |
|
( |
) |
|
$ |
|
( |
) |
|
$ |
|
|
|
Net Loss attributable to common shareholders |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
|
|
Earnings Per Share (Basic and Diluted) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Six months ended June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Net Loss |
|
$ |
|
( |
) |
|
$ |
|
( |
) |
|
$ |
|
|
|
Net Loss attributable to common shareholders |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
|
|
Earnings Per Share (Basic and Diluted) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
Other new pronouncements issued but not effective as of June 30, 2023 are not expected to have a material impact on the Company’s condensed financial statements.
NOTE 4. LIQUIDITY, CONTINUED OPERATIONS, AND GOING CONCERN
During the year ended December 31, 2022, the Company entered into multiple financing agreements to fund operations. Further discussion of these transactions can be found in Notes 12 and 15 in the Company's Annual Report on Form 10-K for the year ended December 31, 2022.
8
In March 2023, the Company redeployed its Thornton manufacturing facility to focus on industrial commercialization of the Company's patent-pending Perovskite solar technologies. Additionally, while the Company purchased manufacturing assets in Zurich, Switzerland in April 2023 with plans to commence manufacturing using this equipment, Management continues to evaluate its manufacturing options. Management does not expect that sales revenue and cash flows will be sufficient to support operations and cash requirements until the Company is able to achieve large scale production capacities. During the six months ended June 30, 2023 the Company used $
Additionally, projected revenues may not result in a positive cash flow position for the next twelve months. The Company also has a working capital deficit of $
The Company continues to look for ways to expand 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 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.
Management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. These condensed financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.
NOTE 5. ASSET ACQUISITION
On
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 $
9
|
Asset Price Allocation |
|
|
Inventory |
|
|
|
Raw Material |
$ |
|
|
Finished Goods |
|
|
|
Other Assets |
|
|
|
Fixed Assets |
|
|
|
Manufacturing machinery and equipment |
|
|
|
Furniture, fixtures, computer hardware and |
|
|
|
In addition to the Asset Purchase Agreement, on
NOTE 6. RELATED PARTY TRANSACTIONS
On September 15, 2021, the Company entered into a Long-Term Supply and Joint Development Agreement (“JDA”) with TubeSolar. Under the terms of the JDA, the Company will produce, and TubeSolar will purchase, thin-film photovoltaic (“PV”) foils (“PV Foils”) for use in TubeSolar’s solar modules for agricultural photovoltaic (“APV”) applications that require solar foils for its production. Additionally, the Company will receive (i) up to $
The Company and TubeSolar have also jointly established Ascent Solar Technologies Germany GmbH (“Ascent Germany”), in which TubeSolar holds
10
NOTE 7. PROPERTY, PLANT AND EQUIPMENT
The following table summarizes property, plant and equipment as of June 30, 2023 and December 31, 2022:
|
|
As of |
|
|
As of |
|
||
|
|
2023 |
|
|
2022 |
|
||
Furniture, fixtures, computer hardware and |
|
$ |
|
|
$ |
|
||
Manufacturing machinery and equipment |
|
|
|
|
|
|
||
Leasehold improvements |
|
|
|
|
|
|
||
Manufacturing machinery and equipment, |
|
|
|
|
|
|
||
Depreciable property, plant and equipment |
|
|
|
|
|
|
||
Less: Accumulated depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
Net property, plant and equipment |
|
$ |
|
|
$ |
|
||
Depreciation expense for the three months ended June 30, 2023 and 2022 was $
NOTE 8. OPERATING LEASE
The Company’s lease is primarily comprised of approximately
As of June 30, 2023 and December 31, 2022, assets and liabilities related to the Company’s leases were as follows:
|
|
As of |
|
|
As of |
|
||
|
|
2023 |
|
|
2022 |
|
||
Operating lease right-of-use assets, net |
|
$ |
|
|
$ |
|
||
Current portion of operating lease liability |
|
|
|
|
|
|
||
Non-current portion of operating lease liability |
|
|
|
|
|
|
||
During the three months ended June 30, 2023 and 2022, the Company recorded operating lease expense included in selling, general and administrative expenses of $
Future maturities of the operating lease liability are as follows:
Remainder of 2023 |
|
$ |
|
|
2024 |
|
|
|
|
2025 |
|
|
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
Total lease payments |
|
|
|
|
Less amounts representing interest |
|
|
( |
) |
Present value of lease liability |
|
$ |
|
The remaining weighted average lease term and discount rate of the operating leases is
11
NOTE 9. INVENTORIES
Inventories, net of reserves, consisted of the following at June 30, 2023 and December 31, 2022:
|
|
As of |
|
|
As of |
|
||
|
|
2023 |
|
|
2022 |
|
||
Raw materials |
|
$ |
|
|
$ |
|
||
Work in process |
|
|
|
|
|
|
||
Finished goods |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
NOTE 10. OTHER 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 $
NOTE 11. CONVERTIBLE NOTES
The following table provides a summary of the activity of the Company's secured, convertible, promissory notes:
|
Principal |
|
Notes converted |
|
Principal |
|
Less: |
|
Net Principal |
|
|||||
Sabby Volatility Warrant Master Fund, LTD |
$ |
|
$ |
( |
) |
$ |
|
$ |
( |
) |
$ |
|
|||
L1 Capital Global Opportunities Master Fund, Ltd |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|||
|
$ |
|
$ |
( |
) |
$ |
|
$ |
( |
) |
$ |
|
|||
Sabby / L1 Convertible Notes
On 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 $
On March 29, 2023, the Company and each of the Investors entered into a Waiver and Amendment Agreement (the “Amendment”) relating to the Securities Purchase Contract and the Advance Notes to waive any event of default arising under Section 2.1 of the Advance Notes relating to the Company’s receipt of notice from the Listing Qualifications Department of Nasdaq indicating that the Company is not in compliance with the $
Pursuant to the Amendment, the Company and each of the Investors agreed to waive the Specified Default and further agreed to the amend the Advance Notes to provide that (i) the new “Floor Price” for all purposes of the Advance Notes is $
12
Notes to be repaid plus accrued and unpaid interest thereon (if any). The Company's failure to comply with the terms of the Amendment would constitute an Event of Default under the Advance Notes.
On April 12, 2023, the Company and each of the Investors entered in a further amendment to the Amendment (the “Revised Amendment”), to provide for a consistent prepayment schedule for the Advance Notes held by each of the Investors. After giving effect to the Revised Amendment, the Advance Notes will be prepaid by the Company in cash on the following dates and in the following aggregate amounts, at a price equal to
Prepayment Date |
Aggregate |
|
|
April 3, 2023 |
$ |
|
|
April 13, 2023 |
|
|
|
May 18, 2023 |
|
|
|
June 19, 2023 |
|
|
|
|
$ |
|
|
On May 22, 2023, the Investors and the Company agreed to defer for 90 days each of the two prepayments of $
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,
The Securities Purchase Contract also included certain warrants to purchase up to
On
On
13
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 $
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 $
During the six months ended June 30, 2023, the Company settled $
|
Debt Settlement |
|
|
Equity issued for convertible debt |
$ |
|
|
Conversions payable |
|
|
|
Cash repayments |
|
|
|
Accelerated discount recognized in APIC |
|
|
|
Principal settled during the six months ended June 30, 2023 |
$ |
|
|
During the three and six months ended June 30, 2023, the Company had interest expense of $
NOTE 12. SERIES A PREFERRED STOCK
As of January 1, 2023, there were
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 $
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 June 30, 2023, there were
14
NOTE 13. SERIES 1B PREFERRED STOCK
On
The Series 1B Preferred Stock ranks senior to the common stock with respect to dividends and rights upon liquidation. Holders of the Series 1B Preferred Stock do not have voting rights and are not entitled to any fixed rate of dividends; 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 1B Preferred Stock in 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.
There is no scheduled or mandatory redemption for the Series 1B Preferred Stock and there is no redemption for the Series 1B Preferred Stock exercisable (i) at the option of the Investor, or (ii) at the option of the Company.
Upon our liquidation, dissolution or winding up, holders of Series 1B Preferred Stock will be entitled to be paid out of our assets, prior to the holders of our common stock, an amount equal to $
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 $
On the Reset Date, the conversion price shall be equal to the lower of (i) $
Holders of the 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
NOTE 14. STOCKHOLDERS’ EQUITY (DEFICIT)
Common Stock
At June 30, 2023, the Company had
15
During the six months ended June 30, 2023, $
Preferred Stock
At June 30, 2023, the Company had
The following table summarizes the designations, shares authorized, and shares outstanding for the Company’s Preferred Stock:
Preferred Stock Series Designation |
|
Shares |
|
|
Shares |
|
||
Series A |
|
|
|
|
|
|
||
Series 1A |
|
|
|
|
|
|
||
Series B-1 |
|
|
|
|
|
|
||
Series B-2 |
|
|
|
|
|
|
||
Series 1B |
|
|
|
|
|
|
||
Series C |
|
|
|
|
|
|
||
Series D |
|
|
|
|
|
|
||
Series D-1 |
|
|
|
|
|
|
||
Series E |
|
|
|
|
|
|
||
Series F |
|
|
|
|
|
|
||
Series G |
|
|
|
|
|
|
||
Series H |
|
|
|
|
|
|
||
Series I |
|
|
|
|
|
|
||
Series J |
|
|
|
|
|
|
||
Series J-1 |
|
|
|
|
|
|
||
Series K |
|
|
|
|
|
|
||
Warrants
As of June 30, 2023, there are
Series A 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, 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 six months ended June 30, 2023.
NOTE 15. SHARE-BASED COMPENSATION
In 2022, the Company granted restricted stock units to 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
16
|
|
Shares |
|
|
Weighted Average Grant Date Fair Value |
|
||
Non-vested at January 1, 2023 |
|
|
|
|
|
|
||
Vested |
|
|
|
|
|
|
||
Forfeited |
|
|
|
|
|
|
||
Non-vested at June 30, 2023 |
|
|
|
|
|
|
||
NOTE 16. COMMITMENTS AND CONTINGENCIES
On April 26, 2023, the board of directors of the Company terminated Jeffrey Max as the Company’s President and Chief Executive Officer. Mr. Max claims that his termination was not for cause as defined in his employment agreement which could enable him to certain benefits, including severance and vesting of restricted stock units. Management believes Mr. Max was terminated for cause and any such claims, if asserted, would be without substantial merit. Although the outcome of any legal proceedings is uncertain, the Company will vigorously defend any future claims made by Mr. Max.
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 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 financial position or results of operations in particular quarterly or annual periods.
NOTE 17. SUBSEQUENT EVENTS
Subsequent to June 30, 2023, Sabby and L1 converted approximately $
17
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, 2022 which was filed with the SEC on March 10, 2023. This discussion and analysis contains statements of a forward-looking nature relating to future events or our future financial performance. As a result of many factors, our actual results may differ materially from those anticipated in these forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. 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, 2022 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 six months ended June 30, 2023, we generated $225,526 of total revenue. As of June 30, 2023, we had an accumulated deficit of $469,078,672.
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.
18
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.
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. Additionally, while the Company purchased manufacturing assets in Zurich, Switzerland in April 2023 with plans to commence manufacturing using this equipment, Management continues to evaluate its manufacturing options.
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:
19
Basis of Presentation: The accompanying unaudited condensed financial statements have been derived from the accounting records of Ascent Solar Technologies, Inc. as of June 30, 2023 and December 31, 2022, and the results of operations for the three and six months ended June 30, 2023 and 2022.
Critical Accounting Policies and Estimates
Critical accounting policies used in reporting our financial results are reviewed by management on a regular basis. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Processes used to develop these estimates are evaluated on an ongoing basis. Estimates are based on historical experience and various other assumptions that are believed to be reasonable for making judgments about the carrying value of assets and liabilities. Actual results may differ as outcomes from assumptions may change.
The Company’s significant accounting policies were described in Note 3 to the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Except for the adoption of ASU 2020-06, there have been no significant changes to our accounting policies as of June 30, 2023.
Results of Operations
Comparison of the Three Months Ended June 30, 2023 and 2022
|
|
Three Months Ended |
|
|
|
|
||||||
|
|
2023 |
|
|
2022 |
|
|
$ Change |
|
|||
Revenues |
|
|
|
|
|
|
|
|
|
|||
Products |
|
$ |
86,385 |
|
|
$ |
627,571 |
|
|
$ |
(541,186 |
) |
Milestone and engineering |
|
|
14,916 |
|
|
|
10,000 |
|
|
|
4,916 |
|
Total Revenues |
|
|
101,301 |
|
|
|
637,571 |
|
|
|
(536,270 |
) |
|
|
|
|
|
|
|
|
|
|
|||
Costs and Expenses |
|
|
|
|
|
|
|
|
|
|||
Cost of Revenue |
|
|
666,269 |
|
|
|
576,994 |
|
|
|
89,275 |
|
Research, development and |
|
|
822,321 |
|
|
|
1,453,273 |
|
|
|
(630,952 |
) |
Selling, general and administrative |
|
|
1,178,832 |
|
|
|
871,881 |
|
|
|
306,951 |
|
Share-based compensation |
|
|
560,861 |
|
|
|
- |
|
|
|
560,861 |
|
Depreciation and amortization |
|
|
24,443 |
|
|
|
17,838 |
|
|
|
6,605 |
|
Total Costs and Expenses |
|
|
3,252,726 |
|
|
|
2,919,986 |
|
|
|
332,740 |
|
Loss From Operations |
|
|
(3,151,425 |
) |
|
|
(2,282,415 |
) |
|
|
(869,010 |
) |
|
|
|
|
|
|
|
|
|
|
|||
Other Income/(Expense) |
|
|
|
|
|
|
|
|
|
|||
Other income/(expense), net |
|
|
- |
|
|
|
2,000 |
|
|
|
(2,000 |
) |
Interest Expense |
|
|
(761,877 |
) |
|
|
(32,370 |
) |
|
|
(729,507 |
) |
Total Other Income/(Expense) |
|
|
(761,877 |
) |
|
|
(30,370 |
) |
|
|
(731,507 |
) |
Income/(Loss) on Equity Method Investments |
|
|
(170 |
) |
|
|
- |
|
|
|
(170 |
) |
Net (Loss)/Income |
|
$ |
(3,913,472 |
) |
|
$ |
(2,312,785 |
) |
|
$ |
(1,600,687 |
) |
Total Revenues. Our total revenues decreased by $536,270, or 84%, for the three months ended June 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.
Cost of revenue. Cost of revenues is primarily comprised of repair and maintenance, material costs, and direct labor and overhead expenses. Our Cost of revenues increased by $89,275, or 15%, for the three months ended June 30, 2023 when compared to the same period in 2022. This is primarily due to expenses from our asset acquisition of Flisom's manufacturing equipment and employee contracts, partially offset by redeploying the Company's manufacturing facilities as a perovskite research facility.
20
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. It also includes costs related to technology development. Research, development and manufacturing operations costs decreased by $630,952, or 43%, for the three months ended June 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 increased by $306,951, or 35%, for the three months ended June 30, 2023 when compared to the same period in 2022. The increase in costs is due primarily to increased professional services and other administrative expenses.
Share-based compensation. Share-based compensation expense increased by $560,861 or 100% for the three months ended June 30, 2023 when compared to the same period in 2022. The increase is due to the employment agreement between the Company and the CEO and CFO for restricted stock units in September and December of 2022, respectively.
Other Income/Expense. Other expense was $761,877 for the three months ended June 30, 2023, compared to other expense of $30,370 for the same period in 2022, an increase of $731,507. The increase is due primarily to an increase in interest expense resulting from the accretion of debt discount and interest expense on the convertible debt.
Net Loss. Our Net Loss increased by $1,600,687, or 69%, for the three months ended June 30, 2023 compared to the same period in 2022 due primarily to the items mentioned above.
Comparison of the Six Months Ended June 30, 2023 and 2022
|
|
Six Months Ended |
|
|
|
|
||||||
|
|
2023 |
|
|
2022 |
|
|
$ Change |
|
|||
Revenues |
|
|
|
|
|
|
|
|
|
|||
Product Revenue |
|
$ |
185,610 |
|
|
$ |
681,781 |
|
|
$ |
(496,171 |
) |
Milestone and engineering |
|
|
39,916 |
|
|
|
522,000 |
|
|
|
(482,084 |
) |
Total Revenues |
|
|
225,526 |
|
|
|
1,203,781 |
|
|
|
(978,255 |
) |
|
|
|
|
|
|
|
|
|
|
|||
Costs and Expenses |
|
|
|
|
|
|
|
|
|
|||
Cost of Revenue |
|
|
1,128,064 |
|
|
|
1,109,885 |
|
|
|
18,179 |
|
Research, development and |
|
|
2,488,016 |
|
|
|
2,859,595 |
|
|
|
(371,579 |
) |
Selling, general and administrative |
|
|
2,770,652 |
|
|
|
1,693,145 |
|
|
|
1,077,507 |
|
Share-based compensation |
|
|
1,965,311 |
|
|
|
- |
|
|
|
1,965,311 |
|
Depreciation and amortization |
|
|
50,224 |
|
|
|
34,503 |
|
|
|
15,721 |
|
Total Costs and Expenses |
|
|
8,402,267 |
|
|
|
5,697,128 |
|
|
|
2,705,139 |
|
Loss From Operations |
|
|
(8,176,741 |
) |
|
|
(4,493,347 |
) |
|
|
(3,683,394 |
) |
|
|
|
|
|
|
|
|
|
|
|||
Other Income/(Expense) |
|
|
|
|
|
|
|
|
|
|||
Other Income/(Expense), net |
|
|
10,000 |
|
|
|
2,000 |
|
|
|
8,000 |
|
Interest Expense |
|
|
(1,829,913 |
) |
|
|
(2,118,685 |
) |
|
|
288,772 |
|
Total Other Income/(Expense) |
|
|
(1,819,913 |
) |
|
|
(2,116,685 |
) |
|
|
296,772 |
|
Income/(Loss) on Equity Method Investments |
|
|
(170 |
) |
|
|
(2 |
) |
|
|
(168 |
) |
Net (Loss)/Income |
|
$ |
(9,996,824 |
) |
|
$ |
(6,610,034 |
) |
|
$ |
(3,386,790 |
) |
Total Revenues. Our total revenues decreased by $978,255, or 81%, for the six months ended June 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.
21
Cost of revenue. Cost of revenues is primarily comprised of repair and maintenance, material costs, and direct labor and overhead expenses. Our Cost of revenues increased by $18,179, or 2%, for the six months ended June 30, 2023 when compared to the same period in 2022. The slight increase is primarily due to expenses from our asset acquisition of Flisom's manufacturing equipment and employee contracts, partially offset by redeploying the Company's manufacturing facilities as a perovskite research facility.
Research, development and manufacturing operations. Research, development and manufacturing operations costs include costs incurred for product development, 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 decreased by $371,579, or 13%, for the six months ended June 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 increased by $1,077,507, or 64% for the six months ended June 30, 2023 when compared to the same period in 2022. The increase in costs is due primarily to increased personnel costs, professional services and other administrative expenses.
Share-based compensation. Share-based compensation expense increased by $1,965,311 or 100% for the six months ended June 30, 2023 when compared to the same period in 2022. The increase is due to the employment agreement between the Company and the CEO and CFO for restricted stock units in September and December of 2022, respectively.
Other Income/Expense. Other expense was $1,819,913 for the six months ended June 30, 2023, compared to other expense of $2,116,685 for the same period in 2022, a decrease of $296,772. The decline is due primarily to the Company recording accelerating debt discount as interest expense in the prior year. With the adoption of ASU 2020-06, the accelerated debt discount is now recorded in stockholders' equity.
Net Loss. Our Net Loss increased by $3,386,790, or 51%, for the six months ended June 30, 2023 compared to the same period in 2022 due primarily to the items mentioned above.
Liquidity and Capital Resources
The Company has redeployed its Thornton facilities from a manufacturing facility to a research and development facility. Additionally, while the Company purchased manufacturing assets in Zurich, Switzerland in April 2023 with plans to commence manufacturing in Switzerland, Management continues to evaluate its manufacturing options. Management does not expect that sales revenue and cash flows will be sufficient to support operations and cash requirements until the Company is able to achieve large-scale production capacities. During the six months ended June 30, 2023 the Company used $6,577,826 in cash for operations.
Additionally, projected total revenues are not anticipated to result in a positive cash flow position for the year overall and, as of June 30, 2023, the Company has working capital deficit of $9,121,533. 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, 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.
Management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. These condensed financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.
22
Statements of Cash Flows Comparison of the Six Months Ended June 30, 2023 and 2022
For the six months ended June 30, 2023, our cash used in operations was $6,577,826 compared to $5,375,684 for the six months ended June 30, 2022, an increase of $1,202,142. This increase is due primarily to increased Company expenses and decreased revenue. For the six months ended June 30, 2023, cash used in investing activities was $3,849,542 compared to $156,804 used in investing activities for the six months ended June 30, 2022. This change was primarily the result of the asset acquisition in Zurich, Switzerland. During the six months ended June 30, 2023, net cash used in operations of $6,577,826 were primarily funded from 2022 financing agreements.
Off Balance Sheet Transactions
As of June 30, 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 requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and smaller reporting companies have reduced disclosure obligations regarding executive compensation.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Foreign Currency Exchange Risk
We hold no significant funds and have no significant future obligations denominated in foreign currencies as of June 30, 2023.
Although our reporting currency is the U.S. Dollar, we may conduct business and incur costs in the local currencies of other countries in which we may operate, make sales and buy materials. As a result, we are subject to currency translation risk. Further, changes in exchange rates between foreign currencies and the U.S. Dollar could affect our future net sales and cost of sales and could result in exchange losses.
Interest Rate Risk
Our exposure to market risks for changes in interest rates relates primarily to our cash equivalents and investment portfolio. As of June 30, 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 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
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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 June 30, 2023. Based on this evaluation, our management concluded the design and operation of our disclosure controls and procedures were effective as of June 30, 2023.
Changes in Internal Control Over Financial Reporting
There were no changes in internal control over financial reporting during the six months ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
24
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 aware 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.
Item 1A. Risk Factors
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, 2022. Except as set forth below, there have been no material changes to our risk factors from those included in our Annual Report on Form 10-K for the year ended December 31, 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.
The Company has requested a hearing before the Panel to appeal the Second Notice and to address all outstanding matters, including compliance with the Bid Price Requirement, the Low Priced Stocks Rule and the Stockholders’ Equity Rule. While the appeal process is pending, the suspension of trading of the Company’s common stock, will be stayed and the common stock will continue to trade on The Nasdaq Capital Market until the hearing process concludes and the Panel issues a written decision.
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The Company expects that its hearings will occur in early October 2023. There can be no assurance that a favorable decision will be obtained from the Panel.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Not applicable.
Issuer Purchases of Equity Securities
We did not repurchase any of our equity securities during the six months ended June 30, 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. |
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Description |
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3.1 |
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3.2 |
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3.3 |
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3.4 |
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3.5 |
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3.6 |
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3.7 |
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3.8 |
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3.9 |
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3.10 |
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3.11 |
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3.12 |
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3.13 |
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3.14 |
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3.15 |
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3.16 |
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3.17 |
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3.18 |
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4.1 |
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4.2 |
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4.3 |
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10.1 CTR |
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10.2 CTR |
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10.3 |
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10.4 CTR |
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10.5 |
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10.6 CTR |
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10.7 |
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10.8† |
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10.9† |
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10.10+ |
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10.11+ |
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10.12 |
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10.13 |
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10.14†CTR |
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10.15† |
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10.16 |
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10.17 |
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10.18 |
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10.19 |
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10.20 |
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10.21 |
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10.22 |
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10.23 |
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10.24 |
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10.25 |
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10.26 |
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10.27 |
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10.28 |
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10.29† |
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CEO Employment Agreement between the Company and Paul Warley dated as of May 1, 2023 |
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10.30 |
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10.31 |
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31.1* |
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Chief Executive Officer Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002 |
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31.2* |
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Chief Financial Officer Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002 |
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32.1* |
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Chief Executive Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002 |
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32.2* |
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Chief Financial Officer Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002 |
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101.INS |
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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. |
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101.SCH |
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Inline XBRL Taxonomy Extension Schema Document |
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101.CAL |
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Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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101.DEF |
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Inline XBRL Taxonomy Extension Definition Linkbase Document |
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101.LAB |
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Inline XBRL Taxonomy Extension Label Linkbase Document |
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101.PRE |
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Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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* |
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Filed herewith |
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CTR |
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Portions of this exhibit have been omitted pursuant to a request for confidential treatment. |
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† |
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Denotes management contract or compensatory plan or arrangement. |
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+ |
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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 8th day of August, 2023.
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August 8, 2023 |
By: |
/s/ PAUL WARLEY |
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Paul Warley Chief Executive Officer (Principal Executive Officer) |
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August 8, 2023 |
By: |
/s/ JIN JO |
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Jin Jo Chief Financial Officer (Principal Financial and Accounting Officer) |
31
Exhibit 31.1
ASCENT SOLAR TECHNOLOGIES, INC.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Paul Warley, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Ascent Solar Technologies, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
August 8, 2023 |
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/s/ PAUL WARLEY |
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Paul Warley Chief Executive Officer (Principal Executive Officer) |
Exhibit 31.2
ASCENT SOLAR TECHNOLOGIES, INC.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jin Jo, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Ascent Solar Technologies, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
August 8, 2023 |
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By: |
/s/ JIN JO |
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Jin Jo Chief Financial Officer (Principal Financial and Accounting Officer) |
Exhibit 32.1
ASCENT SOLAR TECHNOLOGIES, INC.
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT
TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Ascent Solar Technologies, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2023 as filed with the Securities and Exchange Commission on the date therein specified (the “Report”), I, Paul Warley, Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
August 8, 2023 |
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/s/ PAUL WARLEY |
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Paul Warley Chief Executive Officer (Principal Executive Officer) |
Exhibit 32.2
ASCENT SOLAR TECHNOLOGIES, INC.
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT
TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Ascent Solar Technologies, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2023 as filed with the Securities and Exchange Commission on the date therein specified (the “Report”), I, Jin Jo, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
August 8, 2023 |
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By: |
/s/ JIN JO |
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Jin Jo Chief Financial Officer (Principal Financial and Accounting Officer) |