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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
For the fiscal year ended December 31, 2021
or
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
For the Transition Period
from to
Commission File No. 001-32919
Ascent Solar Technologies, Inc.
(Exact name of registrant as specified in its charter)
Delaware
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20-3672603
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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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12300 Grant Street, Thornton, CO
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80241
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number including area code: 720-872-5000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
|
Trading Symbol(s)
|
Name of exchange on which registered
|
Common Stock, $0.0001 par value per share
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ASTI
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OTC Markets Group
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Securities registered pursuant to Section 12(g) of the
Act:
None
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities
Act. Yes ☐
No ☒
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or 15(d) of the Exchange
Act. Yes ☐
No ☒
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past
90 days. Yes ☒
No ☐
Indicate by check mark whether the registrant has submitted
electronically 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 such
files). ☒ Yes
☐
No
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer,
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in
Rule 12b-2 of the Exchange Act:
Large accelerated filer
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|
☐
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|
Accelerated filer
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|
☐
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|
|
|
|
|
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Non-accelerated filer
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|
☒
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|
Smaller reporting company
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|
☒
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|
|
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|
|
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|
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|
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|
Emerging growth company
|
|
☐
|
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant has filed a report on
and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the
registered public accounting firm that prepared or issued its audit
report. ☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange
Act). Yes ☐
No ☒
As of June 30, 2021, the last business day of the registrant’s
most recently completed second fiscal quarter, the aggregate market
value of the registrant’s common stock held by non-affiliates was
approximately $91,371,601 based upon the last reported sale price
of the registrant’s common stock on that date as reported by OTC
Markets Group (“OTC Markets”).
As of March 14, 2022, there were 30,586,804 shares of our common
stock issued and outstanding.
ASCENT SOLAR TECHNOLOGIES, INC.
Form 10-K Annual Report
for the Fiscal Year ended December 31, 2021
Table of Contents
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K includes “forward-looking
statements” that involve risks and uncertainties. Forward-looking
statements include statements concerning our plans, objectives,
goals, strategies, future events, future net sales or performance,
capital expenditures, financing needs, plans or intentions relating
to acquisitions, business trends and other information that is not
historical information and, in particular, appear under headings
including “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and “Business.” When used in
this Annual 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, but the absence of
these words does not mean that a statement is not forward-looking.
All forward-looking statements are based upon information available
to us on the date of this Annual 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 Annual Report in
the sections captioned “Risk Factors” and “Management’s Discussion
and Analysis of Financial Condition and Results of Operations.”
Factors you should consider that could cause these differences
are:
|
•
|
The
impact of the COVID-19 pandemic on our business, results of
operations, cash flows, financial condition and
liquidity;
|
|
•
|
Our
operating history and lack of profitability;
|
|
•
|
The
substantial doubt about our ability to continue as a going concern
due to our history of operating losses;
|
|
•
|
Our
ability to develop demand for, and sales of, our
products;
|
|
•
|
Our
ability to attract and retain qualified personnel to implement our
business plan and corporate growth strategies;
|
|
•
|
Our
ability to develop sales, marketing and distribution
capabilities;
|
|
•
|
Our
ability to successfully develop and maintain strategic
relationships with key partners, including OEMs, system
integrators, distributors, and e-commerce companies, who deal
directly with end users in our target markets;
|
|
•
|
The
accuracy of our estimates and projections;
|
|
•
|
Our
ability to secure additional financing to fund our short-term and
long-term financial needs;
|
|
•
|
Our
ability to maintain compliance with the OTC Markets listing
standards;
|
|
•
|
Changes
in our business plan or corporate strategies;
|
|
•
|
The
extent to which we are able to manage the growth of our operations
effectively, both domestically and abroad, whether directly owned
or indirectly through licenses;
|
|
•
|
The
supply, availability and price of equipment, components and raw
materials, including the elements needed to produce our
photovoltaic modules;
|
|
•
|
Our
ability to expand and protect the intellectual property portfolio
that relates to our consumer electronics, photovoltaic modules and
processes;
|
|
•
|
Our
ability to maintain effective internal controls over financial
reporting;
|
|
•
|
General
economic and business conditions, and in particular, conditions
specific to the solar power industry;
|
|
•
|
Potential
litigation; and
|
|
•
|
Other
risks and uncertainties discussed in greater detail in the section
captioned “Risk Factors.”
|
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 Annual Report mean Ascent Solar Technologies,
Inc.
PART I
Item 1.
Business
Business Overview
We target high-value specialty solar markets. These include
aerospace, defense, emergency management and consumer/OEM
applications. 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 three highest-value PV verticals:
I. Aerospace: Space, Near-space and Fixed Wing UAV
II. Public Sector: Defense and Emergency Management
III. Commercial Off-grid and Portable Power
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.
Product History
In March 2008, we demonstrated initial operating capacity of our
first production line by beginning production trials as an
end-to-end integrated process. Initial operating capacity
production trials resulted in average thin film device efficiencies
of 9.5% and small area monolithically integrated module
efficiencies of over 7.0%. During 2008, optimization trials
resulted in thin film device efficiencies in the 9.5% to 11.5%
range and corresponding module efficiencies in the 7.0% to 9.0%
range. The test modules measured approximately 15 centimeters wide
by 30 centimeters long, which is significant in that it
demonstrates true production capability where these modules are
processed side-by-side. In contrast, devices tested under
laboratory conditions are usually small area in nature measuring 1
centimeter by 1 centimeter or less. During the first quarter of
2009, we began limited production of monolithically integrated
flexible CIGS modules in our initial production line. Our primary
business model, at that time, was based upon mass production of
solar modules of varying lengths, sizes and configurations. We
provided sample modules to potential customers and development
partners in various industries to explore integration of our
products into new applications.
In July 2009, we obtained independent verification by the U.S.
Department of Energy’s National Renewable Energy Laboratory
(“NREL”) that our modules of approximately 15 centimeters wide by
30 centimeters long measured 10.4% in conversion efficiency. In
October 2009, NREL further verified our achievement of a
manufacturing milestone of 14.0% cell efficiency as well as a peak
efficiency of 11.4% for CIGS modules. Later, in December 2010, we
achieved 12.1% module efficiency on the same form factor. In
October 2010, we completed internal qualification testing of a
flexible packaging solution which successfully passed the rigorous
standard of one thousand (1,000) hours of damp heat testing
(85% relative humidity and 85° C temperature) guideline set forth
by International Electrotechnical Commission (“IEC”) 61646
standards for performance and long-term reliability of thin film
solar modules.
In February 2010, three of our product configurations were
certified by an independent laboratory on a variety of U.S.
Department of Defense (“DOD”) rugged standards known as
MIL-STD-810G. In October 2010, we completed full external
certification under IEC 61646 at an independent laboratory of a
two-meter module. Achieving this certification is required for
building integrated photovoltaic (“BIPV”) and building applied
photovoltaic (“BAPV”) applications used in commercial, industrial
and residential rooftop markets. Certification activities will
continue, as required, as we introduce new products and make
changes or improvements to our already certified products.
1
In 2010, we received an award from R&D Magazine and were
recognized as one of the 100 Most Innovative Technologies, based on
our process of monolithic integration on polyimide substrate. In
2011, Time Magazine selected us as one of the 50 Best Inventions of
the year. In 2015 Ascent Solar won its second R&D 100 Award.
The 2015 award was given for the development of the
MilPak™
platform, a military-grade (MIL-STD-810G tested) and fully
integrated solar power generation and storage unit incorporated
with a Maximum Peak Power Tracking (MPPT) management system.
The
MilPak
platform is one of the most rugged, yet lightweight, power
generation and storage solutions available, both attributes
enabled
by the use of
Ascent’s CIGS technology.
In January 2017, Ascent was awarded a contract to supply
high-voltage SuperLight thin-film CIGS PV blankets. These 50W,
fully laminated, flexible blankets were manufactured using a new
process that was optimized for high performance in near-space
conditions at elevated temperatures, and are custom designed for
easy modular integration into series and parallel configurations to
achieve the desired voltage and current required for such
application.
In November 2017, Ascent introduced the next generation of our
USB-based portable power systems with the XD™ series. The first
product introduced was the XD-12 which, like previous products, is
a folding, lightweight, easily stowable, PV system with USB power
regulation. Unique to this generation of PV portable power is more
PV power (12 Watts) and a 2.0 Amp smart USB output to enable the
XD-12 to charge most smartphones, tablets, and USB-enabled devices
as fast as a wall outlet. The enhanced smart USB circuit works with
the device to be charged so that the device can determine the
maximum power it is able to receive from the XD-12 and ensures the
best possible charging performance directly from the sun.
Also in 2017, Ascent manufactured a new micro-module for a space
customer, approximately 12.8mm x 50mm (0.5in x 2.0in) in size that
is ideal for both laboratory-scale environmental testing, and for
subsequent integration into flight experiments.
In February 2018, the Company introduced the second product in our
XD series. Delivering up to 48 Watts of solar power, we believe the
durable and compact Ascent XD-48 Solar Charger is the ideal
solution for charging many portable electronics and off-grid power
systems. The XD-48’s versatility allows it to charge both military
and consumer electronics directly from the sun wherever needed.
Like the XD-12, the XD-48 has a compact and portable design, and
its rugged, weather-resistant construction withstands shocks,
drops, damage and even minor punctures to power through the
harshest conditions.
In March 2018, we collaborated with a European based customer for
their lighter-than-air, helium-filled airship project, which was
based on our newly developed ultra-light modules with substrate
material that was half of the thickness of our standard modules. In
2019, we completed a repeat order from the same customer who had
since established its airship development operation in the US. In
2020, we received a third and enlarged order from the same customer
and completed the order in the second quarter of 2021. Most
recently, in the 4th
quarter of 2021 we received a fourth order with a targeted ship
date in the 2nd
quarter of 2022.
On September 15, 2021, the Company entered into a Long-Term Supply
and Joint Development Agreement (“JDA”) with TubeSolar AG
(“TubeSolar”), a significant existing stakeholder in the Company.
Under the terms of the JDA, the Company will produce, and TubeSolar
will purchase, thin-film PV foils (“PV Foils”) for use in
TubeSolar’s solar modules for agricultural photovoltaic (“APV”)
applications that require solar foils for its production. Under the
JDA, the Company will receive up (i) to $4 million of non-recurring
engineering (“NRE”) fees, (ii) up to $13.5 million of payments upon
achievement of certain agreed production and cost structure
milestones, and (iii) product revenues from sales of PV Foils to
TubeSolar. The JDA has no fixed term, and may only be terminated by
either party for breach.
The Company and TubeSolar have also jointly established a
subsidiary company in Germany, in which TubeSolar holds a minority
stake of 30% (the “JV”). The purpose of the JV is to establish and
operate a PV manufacturing facility in Germany that will produce
and deliver PV Foils exclusively to TubeSolar. Until the JV
facility is fully operational, PV Foils will be manufactured in the
Company’s existing facility in Thornton, Colorado. The parties
expect to jointly develop next generation tooling for use in
manufacturing PV Foils at the JV facility. The Company purchased
17,500 shares of the JV for 1 Euro per share, on November 10,
2021.
We continue to design and manufacture PV integrated portable power
applications for commercial and military users, including the US
Marine Corps, US AF Special Operations Command, US Special
Operations Command, US Army Special Operations Command, US Army
Futures Command, and others. 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 anywhere
that may need power generation such as in disaster recovery and
emergency preparedness, commercial and personal adventure
expeditions to remote areas, humanitarian efforts in areas with
poor power infrastructure, photography and filming involved in
wildlife observation, to name a few.
2
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 costly back-end assembly of inter-cell
connections. Traditional PV manufacturers assemble PV modules by
bonding or soldering discrete PV cells together. This manufacturing
step typically increases manufacturing costs and, at times, proves
detrimental to the overall yield and reliability of the finished
product. By reducing or eliminating this added step, using our
proprietary monolithic integration techniques, we believe we can
achieve cost savings in, and increase the reliability of, our PV
modules. All tooling necessary for us to meet our near-term
production requirements is installed in our Thornton, Colorado
plant.
We plan to continue the development of our current PV technology to
increase module efficiency, improve our manufacturing tooling and
process capabilities and reduce manufacturing costs. We also plan
to continue to take advantage of research and development contracts
to fund a portion of this development.
Advantages of CIGS on a Flexible Plastic Substrate
Thin film PV solutions differ based on the type of semiconductor
material chosen to act as a sunlight absorbing layer, and also on
the type of substrate on which the sunlight absorbing layer is
affixed. To the best of our knowledge, we believe we are the only
company in the world currently focused on commercial scale
production of PV modules using CIGS on a flexible, plastic
substrate with monolithic integration. We utilize CIGS as a
semiconductor material because, at the laboratory level, it has a
higher demonstrated cell conversion efficiency than amorphous
silicon (“a-Si”) and cadmium telluride (“CdTe”). We also believe
CIGS offers other compelling advantages over both a-Si and CdTe,
including:
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CIGS
versus a-Si: Although a-Si, like
CIGS, can be deposited on a flexible substrate, its conversion
efficiency, which already is generally much lower than that of
CIGS, measurably degrades when it is exposed to ultraviolet light,
including natural sunlight. To mitigate such degradation,
manufacturers of a-Si solar cells are required to implement
measures that add cost and complexity to their manufacturing
processes.
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CIGS
versus CdTe: Although CdTe modules
have achieved conversion efficiencies that are generally comparable
to CIGS in production, we believe CdTe has never been successfully
applied to a flexible substrate on a commercial scale. We believe
the use of CdTe on a rigid, transparent substrate, such as glass,
is unsuitable for a number of our applications. We also believe
CIGS can achieve higher conversion efficiencies than CdTe in
production.
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We believe our choice of substrate material further differentiates
us from other thin-film PV manufacturers. We believe the use of a
flexible, lightweight, insulating substrate that is easier to
install provides clear advantages for our target markets,
especially where rigid substrates are unsuitable. We also believe
our use of a flexible, plastic substrate provides us significant
cost advantages because it enables us to employ monolithic
integration techniques on larger components, which we believe are
unavailable to manufacturers who use flexible, metal substrates.
Accordingly, we are able to significantly reduce part count,
thereby reducing the need for costly back end assembly of inter
cell connections. As the only company, to our knowledge, focused on
the commercial production of PV modules using CIGS on a flexible,
plastic substrate with monolithic integration, we believe we have
the opportunity to address the defense, aerospace, transportation,
off grid, portable power and other weight-sensitive markets with
transformational high quality, value added product applications. It
is these same unique features and our overall manufacturing process
that enable us to produce extremely robust, light and flexible
products.
Competitive Strengths
We believe we possess a number of competitive strengths that
provide us with an advantage over our competitors.
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We are a pioneer in CIGS technology with a proprietary, flexible,
lightweight, high efficiency PV thin film product that positions us
to penetrate a wide range of attractive high value added markets
such as off grid, portable power, transportation, defense, aerial,
and other markets. By
applying CIGS to a flexible plastic substrate, we have developed a
PV module that is efficient, lightweight and flexible; with the
highest power-to-weight ratio in at-scale commercially available
solar. The market for electronic components, such as electronic
packages, casings and accessories, as well as defense portable
power systems, transportation integrated applications and space and
near-space solar power application solutions represent a
significant premium market for the Company. Relative to our thin
film competitors, we believe our advantage in thin film CIGS on
plastic technology provides us with a superior product offering for
these strategic market segments.
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We
have the ability to
manufacture PV modules for different markets and for customized
applications without altering our production processes.
Our
ability to produce PV modules in customized shapes and sizes, or in
a variety of shapes and sizes simultaneously, without interrupting
production flow, provides us with flexibility in addressing target
markets and product applications, and allows us to respond quickly
to changing market conditions. Many of our competitors are limited
by their technology and/or their manufacturing processes to a more
restricted set of product opportunities.
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Our integrated, roll-to-roll manufacturing process and proprietary
monolithic integration techniques provide us a potential cost
advantage over our competitors. Historically,
manufacturers have formed PV modules by manufacturing individual
solar cells and then interconnecting them. Our large format,
roll-to-roll manufacturing process allows for integrated continuous
production. In addition, our proprietary monolithic integration
techniques allow us to utilize laser patterning to create
interconnects, thereby creating PV modules at the same time we
create PV cells. In so doing, we are able to reduce or eliminate an
entire back end processing step, saving time as well as labor and
manufacturing costs relative to our competitors.
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Our lightweight, powerful, and durable solar panels provide a
performance advantage over our competitors. For
applications where a premium is placed on the weight and profile of
the product, our ability to integrate our PV modules into portable
packages and cases offers the customer a lightweight and durable
solution for all their portable electronics.
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Our proven research and development capabilities position us to
continue the development of next generation PV modules and
technologies. Our
ability to produce CIGS based PV modules on a flexible plastic
substrate is the result of a concerted research and development
effort that began more than twenty years ago. We continue to pursue
research and development in an effort to drive efficiency
improvements in our current PV modules and to work toward next
generation technologies and additional applications.
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Our manufacturing process can be differentiated into two distinct
functions; a front-end module manufacturing process and a back-end
packaging process. Our
ability to produce finished unpackaged rolls of CIGS material for
shipment worldwide to customers for encapsulation and integration
into various products enhances our ability to work with partners
internationally and domestically.
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Markets and Marketing Strategy
We target high-value specialty solar markets. These include
aerospace, defense, emergency management and consumer/OEM
applications. This strategy enables us to fully leverage 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 three highest-value PV verticals:
I. Aerospace: Space, Near-space and Fixed Wing UAV
II. Public Sector: Defense and Emergency Management
III. Commercial Off-grid and Portable Power
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. In May 2014, together with our
partners, Silent Falcon UAS Technologies and Bye Aerospace, we
announced the successful first flight of a production version of
the Silent Falcon™ Unmanned Aircraft Systems, powered by Ascent’s
ultra-lightweight, flexible PV modules. In July 2014, our
ultra-lightweight, flexible PV modules were selected by Vanguard
Space Technologies for their NASA Small Business Innovative
Research program. The NASA program is intended to develop an
economical, lightweight alternative to existing and emerging
high-cost solar arrays for high-power space applications. We expect
opportunities in this segment to develop rapidly due to customers'
extensive development, testing and evaluation processes.
4
In March 2016, the Company announced
a major breakthrough
of our high-voltage superlight bare modules, achieving a
power-to-weight ratio of 1,700 watts per kilogram at AM0
environment. What we believe is
the “best-in-class”
specific power is crucial to the aerospace industry where every
pound of weight reduction would translate to incremental cost
savings or increased in payloads. In December 2016, Ascent was
selected by the Japan Aerospace Exploration Agency (“JAXA”) as part
of their next round of evaluations for providing solar technology
for an upcoming mission to Jupiter, as well as to address
additional missions. This decision followed an earlier round of
investigation with promising results, during which the Company's
flexible, monolithically integrated CIGS solar module was subjected
to environmental extremes and continued to operate well. During the
first phase of JAXA's evaluation, Ascent's PV was successfully
tested below -146°C (-231°F) and up to +190°C (+374 °F), and to
only 4% of the sunlight generally received in earth's orbit. In
addition, JAXA has subjected Ascent's PV to radiation and
mechanical testing.
In 2017 we continued to solidify our position in the space and
near-space markets; these challenging requirements and environments
allow for the full utilization of what we believe is the unique
nature and advantages of our lightweight, flexible monolithically
integrated CIGS PV. Through continued work in the PV-powered drone
field, Ascent made significant strides in providing PV power to
high-altitude airships and next-generation space applications.
In January 2017, Ascent was awarded a contract to supply
high-voltage SuperLight thin-film CIGS PV blankets. These 50W,
fully laminated, flexible blankets were manufactured using a new
process that was optimized for high performance in near-space
conditions at elevated temperatures, and are custom designed for
easy modular integration into series and parallel configurations to
achieve the desired voltage and current required for such
application.
In November 2017, Ascent fulfilled a third order from JAXA for
custom PV products designed specifically for their upcoming solar
sail deployment demonstration project. This project was
comprised of small area test cells and large, 19.5cm x 30cm
monolithically integrated modules, all on a very thin, 25-micron
(0.001 inch) plastic substrate which is half the thickness of
Ascent’s production substrate for a standard product. In space,
near-space, and drone applications, the PV substrate accounts for a
significant portion of the product’s overall mass; the PV
construction on the new 25-micron substrates represents a major
breakthrough for these markets. JAXA placed this order after
achieving the desired experimental results from the previous
shipments and subsequent electrical, mechanical and environmental
testing. The 19.5cm x 30cm module is a custom design to match the
anticipated deployment mechanism and PV layout for the final Jovian
spacecraft. We continue to receive testing orders from JAXA.
Also in 2017, Ascent fulfilled a new order, with another repeat
space customer, to manufacture a new micro-module, approximately
12.8mm x 50mm (0.5in x 2.0in) in size that is ideal for both
laboratory-scale environmental testing, and for subsequent
integration into flight experiments.
In 2015 Ascent Solar won its second R&D 100 Award, the 2015
award was given for the development of the MilPak platform, a
military-grade solar power generation and storage unit. The MilPak
platform is one of the most rugged, yet lightweight, power
generation and storage solutions available, both attributes enabled
by the use of Ascent’s CIGS technology.
The military market has a unique set of requirements we believe are
well suited to our products. When integrated with fabric to form
re-deployable arrays, our highly efficient, rugged, lightweight
modules may allow soldiers to minimize battery loads, reduce the
use of conventional fuels, and increase safety through the
streamlining of fuel transport operations, providing the front-line
units with maximum resilience and helping to increase operational
efficiency. We are also working to expand our foldable line of
outdoor solar chargers, such as the XD-12 and the XD-48, which are
well suited for the individual soldier or for the bigger power
needs of a platoon with the ability of several chargers to be
strung together. Our modules can also provide a reliable source of
renewable power in remote areas, regardless of local
infrastructure. We will continue to seek to reach the military
market through partnerships with top systems providers, by
providing Government Service Administration Letters of Supply, and
through direct sales and other blanket purchase agreements with the
government.
Transportation integrated PV, or integration of our flexible solar
modules with vehicles such as commercial trucks, buses, trains and
passenger cars, is another market segment that we believe
represents a significant opportunity. Due to their flexible form
and durable, lightweight properties, our modules can be fitted to
the exterior of various vehicles to provide supplemental power
without significantly affecting the aerodynamics, weight or
aesthetics of the vehicle. We are currently working with multiple
integrators and OEMs to develop effective value-added solutions for
this market.
During the third quarter of 2017, Ascent Solar demonstrated its
breadth of capabilities at the US Special Operations Command
(“SOCOM”) exclusive Technical Experimentation (“TE”) 17-3 Event in
Washington, DC. SOCOM is tasked, by the Department of Defense
(“DoD”), with providing Special Operations Forces (“SOF”) with the
latest war fighting technology available; in support of this
effort, SOCOM sponsors an annual TE event. In July of
2017, SOCOM requested the participation
5
of companies who have proficiency in the areas of Satellite
Communication (“SATCOM”) and Unattended Ground Sensors (“UGS”) for
a TE event. Over 30 companies were selected to
participate, and Ascent Solar was one of only 2 companies selected
to participate who didn’t
actually make
SATCOM or UGS products. Ascent Solar was selected on the
basis and recognition that one of the primary issues facing the DoD
today is the ability to power
all of
their war fighting technology. Ascent’s diverse line-up
of rugged and lightweight portable solar products offers the
potential for the DoD to generate unattended ongoing power, which
could save lives and increase the efficiency of the war fighting
effort. Ascent was honored to be chosen to participate, and
the assessed score we received is indicative of a capability that
has “high potential for SOF use with few
limitations”.
During the third quarter of 2018, Ascent Solar was once again
selected to demonstrate its breadth of capabilities at the SOCOM
exclusive TE 18-3 Event in Washington, DC. In July of 2018, SOCOM
requested the participation of companies who have proficiency in
the areas of Intelligence, Surveillance and Reconnaissance (ISR),
Small Unmanned Aerial Systems (SUAS) and Mobility for the TE
event. Over 50 companies were selected to participate,
and Ascent Solar was one of only 2 companies selected for a second
straight year.
We continue to supply our strategic partners with PV modules to
support their development, testing and certification of new
integrated PV products, including product testing by several
branches of the U.S. military. We believe that our high-power
density flexible solar modules enable new applications for solar
power. By creating mutually beneficial partnerships and
strategically penetrating the markets discussed above, we plan to
develop the landscape of mobile solar power generation with
advanced technology end products.
During 2021, the ASTI team further advanced product acceptance into
the highly stringent space market with demonstrated solar module
survivability under the guidance of NASA Marshal Space Flight
Center (MSFC) MISSE X flight experiment on the International Space
Station (ISS), advancing our Technology Readiness Level (TRL) to 6,
with subsequent flights in 2022-23, both NASA and commercial,
intended to achieve TRL 7. TRL 8 is commonly accepted as space
qualified. Also during 2021, the ASTI team was able to utilize an
ultra-thin lamination made from the coating material used during
MISSE X to build custom modules for a customer to be tested for a
future flight.
Competition
We have pivoted our strategic focus away from large scale utility
projects of the traditional solar markets. We believe our thin
film, monolithically integrated CIGS technology enables us to
deliver sleek, lightweight, rugged, high performance solutions to
serve these markets as competitors from other thin film and c-Si
companies emerge. The landscape of thin film manufacturers
encompasses a broad mix of technology platforms at various stages
of development and consists of a number of medium and small
companies.
The market for traditional, grid connected PV products is dominated
by large manufacturers of c-Si technology, although thin film
technology on glass has begun to emerge among the major players. We
anticipate that while these large manufacturers may continue to
dominate the market with their silicon-based products, thin film
manufacturers will likely capture an increasingly larger share of
the market, as is evident from the success of First Solar (CdTe)
and Solar Frontier (CIGS), both among the top 20 producers
worldwide. In 2019, crystalline silicon PV technology represented
over 90% of global market revenue and production, with the balance
captured by thin film. Approximately half of thin film production
is CdTe production, with the other half being split between CIGS
and a-Si.
We believe that our modules offer unique advantages. Their
flexibility, low areal density (mass per unit area), and high
specific power (power per unit mass) enable use on weight-sensitive
applications, such as portable power, conformal aircraft surfaces,
high altitude long endurance (HALE) fixed wing and lighter than air
(LTA) vehicles, and space applications that are unsuitable for
glass-based modules. Innovative product design, customer focused
development, and our rapid prototyping capability yield modules
that could be integrated into virtually any product to create a
source of renewable energy. Whether compared to glass based or
other flexible modules, our products offer competitive advantages
making them unique in comparison to competing products. We consider
PowerFilm Solar, Global Solar, MiaSolé, and Flisom to be our
closest competitors in terms of technology in the specialty PV
market.
6
Research and Development and Intellectual Property
We intend to continue to invest in research and development in
order to provide near term improvements to our manufacturing
process and products, as well as to identify next generation
technologies relevant to both our existing and potential new
markets. During the years ended December 31, 2021 and 2020 we
incurred approximately $4,140,319 and $1,165,193, respectively, in
research and development costs, which include research and
development incurred in relation to our government contracts, as
well as manufacturing costs incurred while developing our product
lines and manufacturing process.
Our technology was initially developed at ITN beginning in 1994. In
early 2006, ITN assigned to us certain CIGS PV-specific
technologies, and granted to us a perpetual, exclusive, royalty
free, worldwide license to use these technologies in connection
with the manufacture, development, marketing and commercialization
of CIGS PV to produce solar power. In addition, certain of ITN’s
existing and future proprietary process and control technologies,
although nonspecific to CIGS PV, were assigned to us. ITN retained
the right to conduct research and development activities in
connection with PV materials, and we agreed to grant a license back
to ITN for improvements to the licensed technologies and
intellectual property outside of the CIGS PV field.
We protect our intellectual property through a combination of trade
secrets and patent protections. We own the following patents:
Issued Patents and
Registrations
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1
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US
Patent No. 9,640,692 entitled "Flexible Photovoltaic Array with
Integrated Wiring and Control Circuitry, and Associated Methods"
(issued October 12, 2010) (co-owned with PermaCity
Corporation)
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2
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US
Patent No. 8,426,725 entitled “Apparatus and Method for Hybrid
Photovoltaic Device Having Multiple, Stacked, Heterogeneous,
Semiconductor Junctions” (issued April 23, 2013)
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3
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US
Patent No. 8,465,589 entitled “Machine and Process for Sequential
Multi-Sublayer Deposition of Copper Indium Gallium Diselenide
Compound Semiconductors” (issued June 18, 2013)
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4
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US
Patent No. D697,502 entitled "Mobile Electronic Device Case”
(issued January 14, 2014)
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5
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US
Patent No. 8,648,253 entitled “Machine and Process for Continuous,
Sequential, Deposition of Semiconductor Solar Absorbers Having
Variable Semiconductor Composition Deposited in Multiple Sublayers”
(issued February 11, 2014)
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6
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US
Patent No. D781,228 entitled Pocket-Sized Photovoltaic Based Fully
Integrated Portable Power System (issued March 14, 2017)
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7
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US
Patent No. 9,601,650 entitled Machine and Process for Continuous,
Sequential, Deposition of Semiconductor Solar Absorbers Having
Variable Semiconductor Composition Deposited in Multiple Sublayers
(issued March 21, 2017)
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8
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US
Patent No. 9,634,175 entitled Systems and Methods for Thermally
Managing High-Temperature Processes on Temperature Sensitive
Substrates (issued April 25, 2017)
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9
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US
Patent No. 9,640,706 entitled Hybrid Multi-Junction Photovoltaic
Cells and Associated Methods (issued May 2, 2017)
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10
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US
Patent No. 9,640,692 entitled Flexible Photovoltaic Array with
Integrated Wiring and Control Circuitry, and Associated Methods
(issued May 2, 2017)
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11
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US
Patent No. 9,653,635 entitled Flexible High-Voltage Adaptable
Current Photovoltaic Modules and Associated Methods (issued May 16,
2017)
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12
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US
Patent No. 9,780,242 entitled “Multilayer Thin-Film Back Contact
System for Flexible Photovoltaic Devices on Polymer Substrates”
(issued October 3, 2017)
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7
Suppliers
We rely on several unaffiliated companies to supply certain raw
materials used during the fabrication of our PV modules and PV
integrated electronics. We acquire these materials on a purchase
order basis and do not have long term purchase quantity commitments
with the suppliers, although we may enter into such contracts in
the future. We currently acquire all of our high temperature
plastic from one supplier, although alternative suppliers of
similar materials exist. We purchase component molybdenum, copper,
indium, gallium, selenium and indium tin oxides from a variety of
suppliers. We also currently are in the process of identifying and
negotiating arrangements with alternative suppliers of materials in
the United States and Asia.
The manufacturing equipment and tools used in our production
process have been purchased from various suppliers in Europe, the
United States and Asia. Although we have had good relations with
our existing equipment and tools suppliers, we monitor and explore
opportunities for developing alternative sources to drive our
manufacturing costs down.
Employees
As of December 31, 2021, we had 51 full-time and 3 part-time
employees.
Company History
We were formed in October 2005 from the separation by ITN of its
Advanced Photovoltaic Division and all of that division’s key
personnel and core technologies. ITN, a private company
incorporated in 1994, is an incubator dedicated to the development
of thin film, PV, battery, fuel cell and nanotechnologies. Through
its work on research and development contracts for private and
government entities, ITN developed proprietary processing and
manufacturing know-how applicable to PV products generally, and to
CIGS PV products in particular. Our company was established by ITN
to commercialize its investment in CIGS PV technologies. In January
2006, ITN assigned to us all its CIGS PV technologies and trade
secrets and granted to us a perpetual, exclusive, royalty free
worldwide license to use certain of ITN’s proprietary process,
control and design technologies in the production of CIGS PV
modules. Upon receipt of the necessary government approvals in
January 2007, ITN assigned government funded research and
development contracts to us and also transferred the key personnel
working on the contracts to us.
Corporate Information
We were incorporated under the laws of Delaware in October 2005.
Our principal business office is located at 12300 Grant Street,
Thornton, Colorado 80241, and our telephone number is
(720) 872-5000. Our website address is www.AscentSolar.com. Information
contained on our website or any other website does not constitute,
and should not be considered, part of this Annual Report.
Available Information
We file with the Securities and Exchange Commission (“SEC”) our
annual report on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K and all amendments to those reports, proxy
statements and registration statements. Such filings are available
to the public over the internet at the SEC’s website at
http://www.sec.gov. We make available free of charge on, or
through, our website at www.AscentSolar.com our annual reports
on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K and amendments to these reports filed or furnished
pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934, as amended (“Exchange Act”) as soon as reasonably
practicable after we file these materials with the SEC.
8
Item 1A. Risk
Factors
The risks included here are not exhaustive or exclusive. Other
sections of this Annual Report may include additional factors which
could adversely affect our business, results of operations and
financial performance. We operate in a very competitive and rapidly
changing environment. New risk factors emerge from time to time,
and it is not possible for management to predict all such risk
factors, nor can it assess the impact of all such risk factors on
our business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those
contained in any forward-looking statements. Given these risks and
uncertainties, investors should not place undue reliance on
forward-looking statements as a prediction of actual results.
Risks related to the Coronavirus and COVID-19 Pandemic
The COVID-19 pandemic in the United States and world-wide has
caused business disruption which may negatively impact the
Company’s operations and financial results. Public health officials
have recommended and mandated precautions to mitigate the spread of
COVID-19, including prohibitions on travel, congregating in heavily
populated areas and stat-at-home orders or similar measures.
The COVID-19 pandemic affected the Company in many ways just as the
whole world experienced. These included but were not limited
to:
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Severe disruption to
our restructuring and recapitalization efforts due to travel
restrictions and lock-down measures implemented by authorities
across the globe;
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Disruption to workforce
scheduling and recruitment initiatives after new capital was
secured;
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Longer lead time and
higher cost in raw materials and equipment parts;
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Raising labor cost in
line with overall inflation witnessed across the nation;
and
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Extended products and
development cycle and longer delivery time to our
customers.
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These and other impacts of the COVID-19 pandemic could
have the effect of heightening many of the other risk factors
disclosed in this Annual Report on Form 10-K. The ultimate impact
depends on the severity and duration of the
current COVID-19 pandemic and actions taken by
governmental authorities and other third parties in response, each
of which is uncertain, rapidly changing and difficult to predict.
Any of these disruptions could adversely impact our business and
results of operations.
Risks Relating to Our Business
Our continuing operations will require additional capital which we
may not be able to obtain on favorable terms, if at all, or without
dilution to our stockholders. Since inception, we have incurred significant
losses. We expect to continue to incur net losses in the near term.
For the year ended December 31, 2021, our cash used in
operations was $9,404,443. At December 31, 2021, we had cash
and equivalents on hand of $5,961,760.
Although we have commenced production at our manufacturing
facility, we do not expect that sales revenue and cash flows will
be sufficient to support operations and cash requirements until we
have fully implemented our new strategy of focusing on high value
PV products. Product revenues did not result in a positive cash
flow for the 2021 year, and are not anticipated to result in a
positive cash flow for the next twelve months.
During 2021 and 2020, we entered into multiple financing agreements
to fund operations, raising an aggregate of $18,250,000 in net
proceeds. We do not expect that sales revenue and cash flows will
be sufficient to support operations and cash requirements for the
foreseeable future, and we will depend on raising additional
capital to maintain operations until we become profitable. There is
no assurance that we will be able to raise additional capital on
acceptable terms or at all. If we raise additional funds through
the issuance of equity or convertible debt securities, the
percentage ownership of our existing stockholders could be
significantly diluted, and these newly issued securities may have
rights, preferences or privileges senior to those of existing
stockholders. If we raise additional funds through debt financing,
which may involve restrictive covenants, our ability to operate our
business may be restricted. If adequate funds are not available or
are not available on acceptable terms, if and when needed, our
ability to fund our operations, take advantage of unanticipated
opportunities, develop or enhance our products, expand capacity or
otherwise respond to competitive pressures could be significantly
limited, and our business, results of operations and financial
condition could be materially and adversely affected.
9
Our auditors have expressed substantial doubt about our ability to
continue as a going concern. Our auditors’ report on our
December 31, 2021 consolidated financial statements expresses
an opinion that our capital resources as of the date of their audit
report were not sufficient to sustain operations or complete our
planned activities for the year 2022 unless we raised additional funds.
Additionally, 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. Our December 31,
2021 consolidated financial statements do not
include any adjustments that might be necessary should the Company
be unable to continue as a going concern.
We have a limited history of operations, have not generated
significant revenue from operations and have had limited production
of our products. We
have a limited operating history and have generated limited revenue
from operations. Currently we are producing products in quantities
necessary to meet current demand. Under our current business plan,
we expect losses to continue until annual revenues and gross
margins reach a high enough level to cover operating expenses. Our
ability to achieve our business, commercialization and expansion
objectives will depend on a number of factors, including
whether:
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We can
generate customer acceptance of and demand for our
products;
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We
successfully ramp up commercial production on the equipment
installed;
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Our
products are successfully and timely certified for use in our
target markets;
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We
successfully operate production tools to achieve the efficiencies,
throughput and yield necessary to reach our cost
targets;
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The
products we design are saleable at a price sufficient to generate
profits;
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We
raise sufficient capital to enable us to reach a level of sales
sufficient to achieve profitability on terms favorable to
us;
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We are
able to successfully design, manufacture, market, distribute and
sell our products;
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We
effectively manage the planned ramp up of our
operations;
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We
successfully develop and maintain strategic relationships with key
partners, including OEMs, system integrators and distributors,
retailers and e-commerce companies, who deal directly with end
users in our target markets;
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Our
ability to maintain the listing of our common stock on the OTC
Markets;
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Our
ability to achieve projected operational performance and cost
metrics;
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Our
ability to enter into commercially viable licensing, joint venture,
or other commercial arrangements; and
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The
availability of raw materials.
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Each of these factors is critical to our success and accomplishing
each of these tasks may take longer or cost more than expected or
may never be accomplished. It also is likely that problems we
cannot now anticipate will arise. If we cannot overcome these
problems, our business, results of operations and financial
condition could be materially and adversely affected.
We have to date incurred net losses and may be unable to generate
sufficient sales in the future to become profitable. We incurred a net loss of
$6,000,003 for the year ended December 31, 2021 and reported
an accumulated deficit of $427,782,788 as of December 31,
2021. We expect to incur net losses in the near term. Our ability
to achieve profitability depends on a number of factors, including
market acceptance of our specialty PV products at competitive
prices. If we are unable to raise additional capital and generate
sufficient revenue to achieve profitability and positive cash
flows, we may be unable to satisfy our commitments and may have to
discontinue operations.
10
Our business is based on a new technology, and if our PV modules or
processes fail to achieve the performance and cost metrics that we
expect, then we may be unable to develop demand for our PV modules
and generate sufficient revenue to support our
operations. Our
CIGS on flexible plastic substrate technology is a relatively new
technology. Our business plan and strategies assume that we will be
able to achieve certain milestones and metrics in terms of
throughput, uniformity of cell efficiencies, yield, encapsulation,
packaging, cost and other production parameters. We cannot assure
you that our technology will prove to be commercially viable in
accordance with our plan and strategies. Further, we or our
strategic partners and licensees may experience operational
problems with such technology after its commercial introduction
that could delay or defeat the ability of such technology to
generate revenue or operating profits. If we are unable to achieve
our targets on time and within our planned budget, then we may not
be able to develop adequate demand for our PV modules, and our
business, results of operations and financial condition could be
materially and adversely affected.
Our failure to further refine our technology and develop and
introduce improved PV products could render our PV modules
uncompetitive or obsolete and reduce our net sales and market
share. Our success
requires us to invest significant financial resources in research
and development to keep pace with technological advances in the
solar energy industry. However, research and development activities
are inherently uncertain, and we could encounter practical
difficulties in commercializing our research results. Our
expenditures on research and development may not be sufficient to
produce the desired technological advances, or they may not produce
corresponding benefits. Our PV modules may be rendered obsolete by
the technological advances of our competitors, which could harm our
results of operations and adversely impact our net sales and market
share.
Failure to expand our manufacturing capability successfully at our
facilities would adversely impact our ability to sell our products
into our target markets and would materially and adversely affect
our business, results of operations and financial
condition. Our growth
plan calls for production and operations at our facility.
Successful operations will require substantial engineering and
manufacturing resources and are subject to significant risks,
including risks of cost overruns, delays and other risks, such as
geopolitical unrest that may cause us not to be able to
successfully operate in other countries. Furthermore, we may never
be able to operate our production processes in high volume or at
the volumes projected, make planned process and equipment
improvements, attain projected manufacturing yields or desired
annual capacity, obtain timely delivery of components, or hire and
train the additional employees and management needed to scale our
operations. Failure to meet these objectives on time and within our
planned budget could materially and adversely affect our business,
results of operations and financial condition.
We may be unable to manage the expansion of our operations and
strategic alliances effectively. We will need to significantly
expand our operations and form beneficial strategic alliances in
order to reduce manufacturing costs through economies of scale and
partnerships, secure contracts of commercially material amounts
with reputable customers and capture a meaningful share of our
target markets. To date, we have not formed such strategic
alliances and can give no assurances that we will be able to do so.
To manage the expansion of our operations and alliances, we will be
required to improve our operational and financial systems,
oversight, procedures and controls and expand, train and manage our
growing employee base. Our management team will also be required to
maintain and cultivate our relationships with partners, customers,
suppliers and other third parties and attract new partners,
customers and suppliers. In addition, our current and planned
operations, personnel, facility size and configuration, systems and
internal procedures and controls, even when augmented through
strategic alliances, might be inadequate or insufficient to support
our future growth. If we cannot manage our growth effectively, we
may be unable to take advantage of market opportunities, execute
our business strategies or respond to competitive pressures,
resulting in a material and adverse effect to our business, results
of operations and financial condition.
We depend on a limited number of third-party suppliers for key raw
materials, and their failure to perform could cause manufacturing
delays and impair our ability to deliver PV modules to customers in
the required quality and quantity and at a price that is profitable
to us. Our failure to obtain raw
materials and components that meet our quality, quantity and cost
requirements in a timely manner could interrupt or impair our
ability to manufacture our products or increase our manufacturing
cost. Most of our key raw materials are either sole sourced or
sourced by a limited number of third-party suppliers. As a result,
the failure of any of our suppliers to perform could disrupt our
supply chain and impair our operations. Many of our suppliers are
small companies that may be unable to supply our increasing demand
for raw materials as we implement our planned expansion. We may be
unable to identify new suppliers in a timely manner or on
commercially reasonable terms. Raw materials from new suppliers may
also be less suited for our technology and yield PV modules with
lower conversion efficiencies, higher failure rates and higher
rates of degradation than PV modules manufactured with the raw
materials from our current suppliers.
11
Our products may never gain sufficient market acceptance, in which
case we would be unable to sell our products or achieve
profitability. Demand for
our products may never develop sufficiently, and our products may
never gain market acceptance, if we fail to produce products that
compare favorably against competing products on the basis of cost, quality, weight, efficiency and
performance. Demand for our products also will depend on our
ability to develop and maintain successful relationships with key
partners, including distributors, retailers, OEMs, system
integrators and value-added resellers. If our products fail to gain
market acceptance as quickly as we envision or at all, our
business, results of operations and financial condition could be
materially and adversely affected.
We are targeting emerging markets for a significant portion of our
planned product sales. These markets are new and may not develop as
rapidly as we expect or may not develop at all. Our target markets include
portable power, defense, transportation, space and near space
markets. Although certain areas of these markets have started to
develop, some of them are in their infancy. We believe these
markets have significant long-term potential; however, some or all
of these markets may not develop and emerge as we expect. If the
markets do develop as expected, there may be other products that
could provide a superior product or a comparable product at lower
prices than our products. If these markets do not develop as we
expect, or if competitors are better able to capitalize on these
markets our revenues and product margins may be negatively
affected.
Failure to consummate strategic relationships with key partners in
our various target market segments, such as defense and portable
power, transportation, space and near space, and the respective
implementations of the right strategic partnerships to enter these
various specified markets, could adversely affect our projected
sales, growth and revenues. We intend to sell thin-film PV
modules for use in portable power systems, defense and portable
power systems, transportation, space and near space solar panel
applications. Our marketing and distribution strategy is to form
strategic relationships with distributors, value added resellers
and e-commerce to provide a foothold in these target markets. If we
are unable to successfully establish working relationships with
such market participants or if, due to cost, technical or other
factors, our products prove unsuitable for use in such
applications; our projected revenues and operating results could be
adversely affected.
If sufficient demand for our products does not develop or takes
longer to develop than we anticipate, we may be unable to grow our
business, generate sufficient revenue to attain profitability or
continue operations. The solar energy industry is
currently dominated by the rigid crystalline silicon based
technology. The extent to which our flexible thin film PV modules
will be widely adopted is uncertain. Many factors, of which several
are outside of our control, may affect the viability of widespread
adoption and demand for our flexible PV modules.
We face intense competition from other manufacturers of thin-film
PV modules and other companies in the solar energy
industry. The solar
energy and renewable energy industries are both highly competitive
and continually evolving as participants strive to distinguish
themselves within their markets and compete with the larger
electric power industry. We believe our main sources of competition
are other thin film PV manufacturers and companies developing other
solar solutions, such as solar thermal and concentrated PV
technologies.
Many of our existing and potential competitors have substantially
greater financial, technical, manufacturing and other resources
than we do. A competitor’s greater size provides them with a
competitive advantage because they often can realize economies of
scale and purchase certain raw materials at lower prices. Many of
our competitors also have greater brand name recognition,
established distribution networks and large customer bases. In
addition, many of our competitors have well-established
relationships with our current and potential partners and
distributors and have extensive knowledge of our target markets. As
a result of their greater size, these competitors may be able to
devote more resources to the research, development, promotion and
sale of their products or respond more quickly to evolving industry
standards and changes in market conditions than we can. Our failure
to adapt to changing market conditions and to compete successfully
with existing or future competitors could materially and adversely
affect our business, results of operations and financial
condition.
Problems with product quality or performance may cause us to incur
warranty expenses, damage our market reputation and prevent us from
maintaining or increasing our market share. If our products fail to perform as expected
while under warranty, or if we are unable to support the
warranties, sales of our products may be adversely affected or our
costs may increase, and our business, results of operations and
financial condition could be materially and adversely
affected.
We may also be subject to warranty or product liability claims
against us that are not covered by insurance or are in excess of
our available insurance limits. In addition, quality issues can
have various other ramifications, including delays in the
recognition of revenue, loss of revenue, loss of future sales
opportunities, increased costs associated with repairing or
replacing products, and a negative impact on our goodwill and
reputation. The possibility of future product failures could cause
us to incur substantial expenses to repair or replace defective
products. Furthermore, widespread product failures may damage our
market reputation and reduce our market share causing sales to
decline.
12
Currency translation risk may negatively affect our net sales, cost
of equipment, cost of sales, gross margin or profitability and
could result in exchange losses. 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 operate, make sales
or buy equipment or materials. As a result, we are subject to
currency translation risk. Our future contracts and obligations may
be exposed to fluctuations in currency exchange rates, and, as a
result, our capital expenditures or other costs may exceed what we
have budgeted. Further, changes in exchange rates between foreign
currencies and the U.S. dollar could affect our net sales and cost
of sales and could result in exchange losses. We cannot accurately
predict future exchange rates or the overall impact of future
exchange rate fluctuations on our business, results of operations
and financial condition.
A significant increase in the price of our raw materials could lead
to higher overall costs of production, which would negatively
affect our planned product margins, or make our products
uncompetitive in the PV market. Our raw materials include high
temperature plastics and various metals. Significant increases in
the costs of these raw materials may impact our ability to compete
in our target markets at a price sufficient to produce a
profit.
Our intellectual property rights or our means of enforcing those
rights may be inadequate to protect our business, which may result
in the unauthorized use of our products or reduced sales or
otherwise reduce our ability to compete. Our business and competitive
position depends upon our ability to protect our intellectual
property rights and proprietary technology, including any PV
modules that we develop. We attempt to protect our intellectual
property rights, primarily in the United States, through a
combination of patent, trade secret and other intellectual property
laws, as well as licensing agreements and third-party nondisclosure
and assignment agreements. Because of the differences in foreign
patent and other laws concerning intellectual property rights, our
intellectual property rights may not receive the same degree of
protection in foreign countries as they would in the United States.
Our failure to obtain or maintain adequate protection of our
intellectual property rights, for any reason, could have a
materially adverse effect on our business, results of operations
and financial condition. Further, any patents issued in connection
with our efforts to develop new technology for PV modules may not
be broad enough to protect all of the potential uses of our
technology.
We also rely on unpatented proprietary technology. It is possible
others will independently develop the same or similar technology or
otherwise obtain access to our unpatented technology. To protect
our trade secrets and other proprietary information, we require our
employees, consultants and advisors to execute proprietary
information and invention assignment agreements when they begin
working for us. We cannot assure these agreements will provide
meaningful protection of our trade secrets, unauthorized use,
misappropriation or disclosure of trade secrets, know how or other
proprietary information. Despite our efforts to protect this
information, unauthorized parties may attempt to obtain and use
information that we regard as proprietary. If we are unable to
maintain the proprietary nature of our technologies, we could be
materially adversely affected.
In addition, when others control the prosecution, maintenance and
enforcement of certain important intellectual property, such as
technology licensed to us, the protection and enforcement of the
intellectual property rights may be outside of our control. If the
entity that controls intellectual property rights that are licensed
to us does not adequately protect those rights, our rights may be
impaired, which may impact our ability to develop, market and
commercialize our products. Further, if we breach the terms of any
license agreement pursuant to which a third party licenses us
intellectual property rights, our rights under that license may be
affected and we may not be able to continue to use the licensed
intellectual property rights, which could adversely affect our
ability to develop, market and commercialize our products.
Third-party claims of intellectual property infringement may
negatively impact the Company and the Company’s future financial
results. The Company’s commercial
success depends in part on its ability to develop, manufacture,
market and sell its products and use its proprietary technology
without infringing the patent rights of third parties. Numerous
third-party U.S. and non-U.S. issued patents and pending
applications exist in the area of the Company’s products. The
Company may in the future pursue available proceedings in the U.S.
and foreign patent offices to challenge the validity of patents and
patent applications. In addition, or alternatively, the Company may
consider whether to seek to negotiate a license of rights to
technology covered by one or more of such patents and patent
applications. If any patents or patent applications cover the
Company’s products or technologies, the Company may not be free to
manufacture or market its products as planned, absent such a
license, which may not be available to the Company on commercially
reasonable terms, or at all.
It is also possible that the Company has failed to identify
relevant third-party patents or applications. For example, some
applications may be held under government secrecy and US patent
applications that will not be filed outside the United States
remain confidential unless and until patents issue. Moreover, it is
difficult for industry participants, including the Company, to
identify all third-party patent rights that may be relevant to its
product candidates and technologies because patent searching is
imperfect due to differences in terminology among patents,
incomplete databases and the difficulty in assessing the
meaning
13
of patent claims. The Company may fail to identify relevant patents
or patent applications or may identify pending patent applications
of potential interest but incorrectly predict the likelihood that
such patents may issue with claims of relevance to its technology.
In addition, the
Company may
be unaware of one or more issued patents that would be infringed by
the manufacture, sale or use of a current or future products, or
the Company may incorrectly conclude that a third-party patent is
invalid, unenforceable or not infringed by its activities.
Additionally, pending patent applications that have been published
can, subject to specified limitations, be later amended in a manner
that could cover the Company’s technologies, its products or the
use of its products.
There have been many lawsuits and other proceedings filed by third
parties involving patent and other intellectual property rights,
including patent infringement lawsuits, interferences, oppositions,
and reexamination, post-grant review and equivalent proceedings
before the USPTO and corresponding foreign patent offices. Numerous
U.S. and foreign issued patents and pending patent applications,
which are owned by third parties, exist in the fields in which the
Company is developing products or has existing products. As the
industries the Company is involved in expand and more patents are
issued, the risk increases that its product candidates may be
subject to claims of infringement of the patent rights of third
parties.
Parties making claims against the Company may obtain injunctive or
other equitable relief, which could effectively block its ability
to further develop and commercialize the Company’s products.
Defense of these claims, regardless of their merit, would involve
substantial litigation expense and would be a substantial diversion
of employee resources from the Company’s business. In the event of
a successful claim of infringement against the Company, the Company
may have to pay substantial damages, including treble damages and
attorneys’ fees for willful infringement, pay royalties, redesign
its infringing products or obtain one or more licenses from third
parties, which may be impossible or require substantial time and
monetary expenditure.
Our future success depends on retaining our Chief Executive Officer
and existing management team and hiring and assimilating new key
employees, and our inability to attract or retain key personnel
would materially harm our business and results of
operations. Our
success depends on the continuing efforts and abilities of our
executive officers, including Mr. Victor Lee, our President and
Chief Executive Officer, our other executive officers, and key
technical personnel. Our future success also will depend on our
ability to attract and retain highly skilled employees, including
management, technical and sales personnel. The loss of any of our
key personnel, the inability to attract, retain or assimilate key
personnel in the future, or delays in hiring required personnel
could materially harm our business, results of operations and
financial condition.
Our Chief Executive Officer is also employed by another
company. Our Chief
Executive Officer serves as chief financial officer of another
unrelated public company. This employment may compete for our Chief
Executive Officer’s full attention to the Company. The Chief
Executive Officer is only required to devote as much time and
attention to the affairs of the Company as he deems appropriate and
may engage in other business activities and/or other unrelated
employment.
Our PV modules contain limited amounts of cadmium sulfide and
claims of human exposure or future regulations could have a
material adverse effect on our business, results of operations and
financial condition. Our PV modules contain limited
amounts of cadmium sulfide, which is regulated as a hazardous
material due to the adverse health effects that may arise from
human exposure and is banned in certain countries. We cannot assure
you that human or environmental exposure to cadmium sulfide used in
our PV modules will not occur. Any such exposure could result in
third party claims against us, damage to our reputation and
heightened regulatory scrutiny of our PV modules. Future regulation
relating to the use of cadmium in various products could force us
to seek regulatory exemptions or impact the manufacture and sale of
our PV modules and could require us to incur unforeseen
environmental related costs. The occurrence of future events such
as these could limit our ability to sell and distribute our PV
modules, and could have a material adverse effect on our business,
results of operations and financial condition.
Environmental obligations and liabilities could have a substantial
negative impact on our financial condition, cash flows and
profitability. We are
subject to a variety of federal, state, local and foreign laws and
regulations relating to the protection of the environment,
including those governing the use, handling, generation,
processing, storage, transportation and disposal of, or human
exposure to, hazardous and toxic materials (such as the cadmium
used in our products), the discharge of pollutants into the air and
water, and occupational health and safety. We are also subject to
environmental laws which allow regulatory authorities to compel, or
seek reimbursement for, cleanup of environmental contamination at
sites now or formerly owned or operated by us and at facilities
where our waste is or has been disposed. We may incur significant
costs and capital expenditures in complying with these laws and
regulations. In addition, violations of, or liabilities under,
environmental laws or permits may result in restrictions being
imposed on our operating activities or in our being subjected to
substantial fines, penalties, criminal proceedings, third party
property damage or personal injury claims, cleanup costs or other
costs. Also, future developments such as more aggressive
enforcement policies, the implementation of new, more stringent
laws and regulations,
14
or the discovery of presently
unknown environmental conditions or noncompliance may require
expenditures that could have a material adverse effect on our
business, results of operations and financial condition. Further,
greenhouse gas emissions have increasingly become the subject of
international, national, state and local attention. Although future
regulations could potentially lead to an increased use of
alternative energy, there can be no guarantee that such future
regulations will encourage solar technology. Given our limited
history of operations, it is difficult to predict future
environmental expenses.
We currently anticipate having substantial international operations
that will subject us to a number of risks, including potential
unfavorable political, regulatory, labor and tax conditions in
foreign countries. We
entered into the JDA with TubeSolar, a related party (see “Item 1
Business” for additional detail), and expect to expand our
operations abroad in the future and, as a result, we may be subject
to the legal, political, social and regulatory requirements and
economic conditions of foreign jurisdictions. Risks inherent to
international operations, include, but are not limited to, the
following:
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Difficulty
in procuring supplies and supply contracts abroad;
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Difficulty
in enforcing agreements in foreign legal systems;
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Foreign
countries imposing additional withholding taxes or otherwise taxing
our foreign income, imposing tariffs or adopting other restrictions
on foreign trade and investment, including currency exchange
controls;
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Inability
to obtain, maintain or enforce intellectual property
rights;
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Risk of
nationalization;
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Changes
in general economic and political conditions in the countries in
which we may operate, including changes in the government
incentives we might rely on;
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Unexpected
adverse changes in foreign laws or regulatory requirements,
including those with respect to environmental protection, export
duties and quotas;
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Difficulty
with staffing and managing widespread operations;
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Trade
barriers such as export requirements, tariffs, taxes and other
restrictions and expenses, which could increase the prices of our
products and make us less competitive in some countries;
and
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Difficulty
of, and costs relating to, compliance with the different commercial
and legal requirements of the international markets in which we
plan to offer and sell our PV products.
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Our business in foreign markets will require us to respond to rapid
changes in market conditions in these countries. Our overall
success as an international business depends, in part, on our
ability to succeed in differing legal, regulatory, economic, social
and political conditions. If we are not able to develop and
implement policies and strategies that are effective in each
location where we will do business, then our business, results of
operations and financial condition could be materially and
adversely affected.
Existing regulations and policies and changes to these regulations
and policies may present technical, regulatory and economic
barriers to the purchase and use of PV products, which may
significantly reduce demand for our PV products. The market for electricity
generation products is heavily influenced by foreign, U.S., state
and local government regulations and policies concerning the
electric utility industry, as well as policies promulgated by
electric utilities. These regulations and policies often relate to
electricity pricing and technical interconnection of customer owned
electricity generation. In the United States and in a number of
other countries, these regulations and policies have been modified
in the past and may be modified again in the future. These
regulations and policies could deter end user purchases of PV
products and investment in the research and development of PV
technology. For example, without a mandated regulatory exception
for PV systems, utility customers are often charged interconnection
or standby fees for putting distributed power generation on the
electric utility grid. These fees could increase the cost to our
end users of using PV systems and make them less desirable, thereby
harming our business, prospects, results of operations and
financial condition. In addition, electricity generated by PV
systems mostly competes with expensive peak hour electricity,
rather than the less expensive average price of electricity.
Modifications to the peak hour pricing policies of utilities, such
as to a flat rate, would require PV systems to achieve lower prices
in order to compete with the price of electricity from other
sources.
15
We anticipate that our PV modules and their use in installations
will be subject to oversight and regulation in accordance with
national and local ordinances relating to building codes, safety,
environmental protection, utility interconnection and metering and
related matters. It is difficult to track the requirements of
individual states and design equipment to comply with the varying
standards. Any new government regulations or utility policies
pertaining to PV modules may result in significant additional
expenses to us, our business partners and their customers and, as a
result, could cause a significant reduction in demand for our PV
modules.
We may be subject to risks related to our information technology
systems, including the risk that we may be the subject of a
cyber-attack and the risk that we may be in non-compliance with
applicable privacy laws. Our operations depend, in part, on how well
we and our vendors protect networks, equipment, information
technology (IT) systems, and software against damage from a number
of threats, including, but not limited to, cable cuts, damage to
physical plants, natural disasters, intentional damage and
destruction, fire, power loss, hacking, computer viruses,
vandalism, theft, malware, ransomware and phishing attacks. Any of
these and other events could result in IT system failures, delays,
or increases in capital expenses. Our operations also depend on the
timely maintenance, upgrade, and replacement of networks,
equipment, and IT systems and software, as well as preemptive
expenses to mitigate the risks of failures. The failure of IT
systems or a component of IT systems could, depending on the nature
of any such failure, adversely impact our reputation and results of
operations.
We recently remediated material weaknesses in our internal control
over financial reporting. If our remediation efforts were
insufficient to address the material weaknesses, or if additional
material weaknesses or significant deficiencies in our internal
control over financial reporting are discovered or occur in the
future, our consolidated financial statements may contain material
misstatements, which could adversely affect our stock price and
could negatively impact our results of operations. At December 31, 2020 and March
31, 2021, we concluded that there were material weaknesses in our
internal control over financial reporting. A material weakness is a
deficiency, or combination of deficiencies, in internal control
over financial reporting such that there is a reasonable
possibility that a material misstatement of our annual or interim
consolidated financial statements will not be prevented or detected
on a timely basis. We remediated our material weakness and reported
our remediation at June 30, 2021. At December 31, 2021, we concluded that
the design and operation of our disclosure controls and procedures
were effective. See Item 9A in Part II of this Annual Report on
Form 10-K for details.
While we believe that the substantial elimination of the
complexities in the Company’s debt and securities accounting along
with changes in internal controls over financial reporting during
the period from April 1, 2021 to December 31, 2021, have materially
improved the Company’s internal control over financial reporting,
and have effectively remediated the Company’s prior material
weaknesses, we cannot assure that these or other measures will
fully remediate, or have fully remediated, the deficiencies or
material weaknesses. We cannot assure you that we have identified
all of our existing significant deficiencies and material
weaknesses, or that we will not in the future have additional
significant deficiencies or material weaknesses. If we are unable
to remediate a material weakness, or otherwise maintain effective
internal control over financial reporting, we may not be able to
report our financial results accurately, prevent fraud, or file our
periodic reports in a timely manner.
As long as our significant stockholders, BD 1 Investment Holding,
LLC (“BD1”), Crowdex Investment, LLC (“Crowdex”) and TubeSolar,
maintain their current holdings, the ability of our other
stockholders to influence matters requiring stockholder approval
will be limited. As of
March 14, 2022, BD1 beneficially owned 15,933,334 shares of our
common stock, Crowdex beneficially owned 5,545,042 shares of our
common stock, and TubeSolar beneficially owned 4,961,234 shares of
our common stock. As of March 14, 2022, the Company had
approximately 30,586,804 shares of common stock outstanding.
Accordingly, BD1, Crowdex, and TubeSolar together would be able to
cast approximately 86.4% of the votes entitled to vote at any
meeting of stockholders of the Company (or written consent of
stockholders in lieu of meeting). BD1, Crowdex, and TubeSolar,
therefore, will, for the foreseeable future, have significant
influence over our management and affairs, and will be able to
control virtually all matters requiring stockholder approval,
including the election of directors and significant corporate
transactions such as mergers or sales of our Company or assets. On
September 15, 2021, the Company entered into the JDA with
TubeSolar. See “Item 1 Business” for additional detail.
The interests of our three largest stockholders may conflict with
our interests or your interests now or in the future. Three of our stockholders, Crowdex, TubeSolar
and BD1, collectively beneficially own approximately 86.4% of our
Company’s common stock.
16
Crowdex
is an investment holding company 100%
directly and
indirectly beneficially owned by Bernd
Förtsch.
One of our directors, David Peterson, is the manager of
Crowdex
and a cousin of
Michael J. Gilbreth,
the Company’s
Chief
Financial
Officer.
TubeSolar is a developer of photovoltaic thin-film tubes to enable
additional application opportunities in solar power generation
compared to conventional solar modules. TubeSolar is a public
company headquartered in Augsburg, Germany, whose shares are listed
on XETRA (primary market Dusseldorf, Germany). Bernd Förtsch
directly and indirectly owns a controlling interest in TubeSolar.
On September 15, 2021, the Company entered into the JDA with
TubeSolar. See “Item 1 Business” for additional detail.
BD1 is an investment holding company. BD1 is 100% owned by BD
Vermögensverwaltung GmbH. BD Vermögensverwaltung GmbH is 100% owned
by Solar Invest International SE. Johannes Kuhn and Ute Kuhn are
the beneficial owners and members of the board of directors of
Solar Invest International SE. BD Vermögensverwaltung GmbH and
Solar Invest International SE together own approximately 18.9% of
TubeSolar’s shares.
Various conflicts of interest between us and our controlling
stockholders could arise. The ownership interest and voting power
of our controlling stockholders could create or appear to create
potential conflicts of interest when such controlling stockholders
are faced with decisions relating to us. We may not be able to
resolve any potential conflicts, and even if we do, the resolution
may be less favorable to us than if we were dealing with an
unaffiliated third party.
So long as Crowdex, TubeSolar and BD1 continue to beneficially own
a significant amount of our outstanding equity securities, those
stockholders may be able to strongly influence or effectively
control our decisions.
Risks Relating to our Securities and an Investment in our Common
Stock
The price of our common stock may continue to be
volatile. Our common
stock is currently traded on the OTC Markets. The trading price of
our common stock from time to time has fluctuated widely and may be
subject to similar volatility in the future. For example, during
most of the calendar year ended December 31, 2020, our common stock
traded at or below $1.00 and in 2021, our common stock ranged from
$10.00 to $485.00, all prices as adjusted for the reverse stock
split. The trading price of our common stock in the future may be
affected by a number of factors, including events described in
these Risk Factors. In recent years, broad stock market indices, in
general, and smaller capitalization and PV companies, in
particular, have experienced substantial price fluctuations. In a
volatile market, we may experience wide fluctuations in the market
price of our common stock. These fluctuations may have a negative
effect on the market price of our common stock regardless of our
operating performance. In the past, following periods of volatility
in the market price of a company’s securities, securities class
action litigation has often been instituted. A securities class
action suit against us could result in substantial costs, potential
liabilities and the diversion of management’s attention and
resources and could have a material adverse effect on our financial
condition.
As a public company we are subject to complex legal and accounting
requirements that require us to incur substantial expenses, and our
financial controls and procedures may not be sufficient to ensure
timely and reliable reporting of financial information, which, as a
public company, could materially harm our stock price and listing
on OTC Markets. As a
public company, we are subject to numerous legal and accounting
requirements that do not apply to private companies. The cost of
compliance with many of these requirements is substantial, not only
in absolute terms but, more importantly, in relation to the overall
scope of the operations of a small company. Failure to comply with
these requirements can have numerous adverse consequences
including, but not limited to, our inability to file required
periodic reports on a timely basis, loss of market confidence,
delisting of our securities and/or governmental or private actions
against us. We cannot assure you we will be able to comply with all
of these requirements or the cost of such compliance will not prove
to be a substantial competitive disadvantage vis-à-vis our
privately held and larger public competitors.
The Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) requires, among
other things, that we maintain effective internal control over
financial reporting and disclosure controls and procedures. In
particular, we must perform system and process evaluation and
testing of our internal control over financial reporting to allow
management to report on the effectiveness of our internal control
over financial reporting, as required by Section 404 of
Sarbanes-Oxley. Our compliance with Section 404 of
17
Sarbanes-Oxley will require we incur substantial accounting expense
and expend significant management efforts. The effectiveness of our
controls and procedures may, in the future, be limited by a variety
of factors, including:
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Faulty
human judgment and simple errors, omissions or mistakes;
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Fraudulent
action of an individual or collusion of two or more
people;
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Inappropriate
management override of procedures; and
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The
possibility that any enhancements to controls and procedures may
still not be adequate to assure timely and accurate financial
information.
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If we are not able to comply with the requirements of
Section 404 in a timely manner, or if we or our independent
registered public accounting firm, identifies deficiencies in our
internal control over financial reporting that are deemed to be
material weaknesses, we may be subject to OTC Markets delisting,
investigations by the SEC and civil or criminal sanctions.
Our ability to successfully implement our business plan and comply
with Section 404 requires us to be able to prepare timely and
accurate financial statements. We expect we will need to continue
to improve existing, and implement new operational, financial and
accounting systems, procedures and controls to manage our business
effectively.
Any delay in the implementation of, or disruption in the transition
to, new or enhanced systems, procedures or controls may cause our
operations to suffer, and we may be unable to conclude that our
internal control over financial reporting is effective as required
under Section 404 of Sarbanes-Oxley. If we are unable to
complete the required Section 404 assessment as to the
adequacy of our internal control over financial reporting, if we
fail to maintain or implement adequate controls, our ability to
obtain additional financing could be impaired. In addition,
investors could lose confidence in the reliability of our internal
control over financial reporting and in the accuracy of our
periodic reports filed under the Securities Exchange Act of 1934,
as amended (“Exchange Act”). A lack of investor confidence in the
reliability and accuracy of our public reporting could cause our
stock price to decline.
Our stockholders may experience significant dilution as a result of
new securities that we may issue in the future.
We may issue additional common
stock or securities convertible into or exchangeable or exercisable
for common stock, in connection with future capital raising
transactions. The issuance of material amounts of common stock by
us would cause our existing stockholders to experience significant
dilution in their investment in our Company. Also, if we obtain
additional financing involving the issuance of equity securities or
securities convertible into equity securities, our existing
stockholders’ investment would be further diluted. Such dilution
could cause the market price of our common stock to decline, which
could impair our ability to raise additional financing.
Sales of a significant number of shares of our common stock in the
public markets or significant short sales of our stock, or the
perception that such sales could occur, could depress the market
price of our common stock and impair our ability to raise
capital. Sales of a
substantial number of shares of our common stock or other
equity-related securities in the public markets could depress the
market price of our common stock. If there are significant short
sales of our stock, the price decline that could result from this
activity may cause the share price to decline more so, which, in
turn, may cause long holders of the stock to sell their shares,
thereby contributing to sales of stock in the market. Such sales
also may impair our ability to raise capital through the sale of
additional equity securities in the future at a time and price that
our management deems acceptable, if at all. In addition, a large
number of our outstanding shares are not registered under the
Securities Act. If and when these shares are registered or become
eligible for sale to the public market, the market price of our
common stock could also decline.
Our common stock has previously been delisted from the Nasdaq
Capital Market and the OTCQB Venture Market. Our inability to
maintain our prior listings on Nasdaq and OTCQB may limit the
liquidity of our stock, increase its volatility, and hinder our
ability to raise capital. On February 25, 2016, our common
stock was delisted from the Nasdaq Capital Market and began trading
on the OTCQB Venture Market. On May 20, 2017 our common stock was
delisted from the OTCQB Venture Market and began trading on the OTC
Markets.
Upon such delisting from Nasdaq, our common stock became 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. Accordingly, investors in our common stock 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 continue to be eligible for trading
or quotation on the OTC Markets or any other alternative exchanges
or markets.
18
The delisting of our common stock from the
Nasdaq
Capital Market and the OTCQB Venture Market may adversely affect
our ability to raise additional financing through public or private
sales of equity securities, may significantly affect the ability of
investors to trade our securities, and may negatively affect the
value and liquidity of our common stock. Such delisting from
the
Nasdaq
Capital Market and the OTCQB Venture Market may also have other
negative results, including the potential loss of confidence by
employees, the loss of institutional investor interest and fewer
business development opportunities.
Some provisions of our charter documents and Delaware law may have
anti-takeover effects that could discourage an acquisition of us by
others, even if an acquisition would be beneficial to our
stockholders, and may prevent attempts by our stockholders to
replace or remove our current management. Provisions in our Certificate of
Incorporation and Bylaws, each as amended, as well as provisions of
Delaware law, could make it more difficult for a third party to
acquire us, or for a change in the composition of our Board of
Directors (our “Board”) or management to occur, even if doing so
would benefit our stockholders. These provisions
include:
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Authorizing
the issuance of “blank check” preferred stock, the terms of which
may be established and shares of which may be issued without
stockholder approval;
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Dividing
our Board into three classes;
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Limiting
the removal of directors by the stockholders; and
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Limiting
the ability of stockholders to call a special meeting of
stockholders.
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In addition, we are subject to Section 203 of the Delaware General
Corporation Law, which generally prohibits a Delaware corporation
from engaging in any of a broad range of business combinations with
an interested stockholder for a period of three years following the
date on which the stockholder became an interested stockholder,
unless such transactions are approved by our Board. This provision
could have the effect of delaying or preventing a change of
control, whether or not it is desired by, or beneficial to, our
stockholders.
None.
Item 2.
Properties
Our principal business office and manufacturing facility is located
in a leased space at 12300 Grant Street, Thornton, Colorado 80241.
We have approximately 30,000 square feet of fully equipped office
space and 70,000 square feet of fully equipped manufacturing space.
We consider our office space adequate for our current
operations.
Item 3.
Legal Proceedings
Details of the Company’s legal proceedings are included in
Note 17 to the consolidated financial statements within
Item 8 of this Annual Report on Form 10-K.
Item 4. Mine Safety Disclosures
Not applicable.
19
PART II
Item 5. Market for Registrant’s Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our stock previously traded on the Nasdaq Capital Market. On
February 23, 2016 the Company received notice from Nasdaq stating
that Nasdaq had determined to delist the Company's common stock. On
May 20, 2017 our common stock was delisted from the OTCQB Venture
Market and began trading on the OTC Markets. Our trading symbol is
“ASTI.”
Holders
As of December 31, 2021, the number of record holders of our
common stock was 25. Because many of our shares of common stock are
held by brokers and other institutions on behalf of stockholders,
we are unable to estimate the total number of stockholders
represented by these record holders.
Dividends
The holders of common stock are entitled to receive such dividends
as may be declared by our Board of Directors. During the years
ended December 31, 2021 and 2020, we did not pay any common
stock dividends, and we do not expect to declare or pay any
dividends in the foreseeable future. Payment of future dividends
will be within the discretion of our Board of Directors and will
depend on, among other factors, our retained earnings, capital
requirements, and operating and financial condition.
Recent Sales of Unregistered Securities
During the year ended December 31, 2021, all sales of unregistered
securities by the Company have been previously reported on a Form
8-K or Form 10-Q.
Issuer Purchases of Equity Securities
We did not repurchase any of our equity securities during the
period covered by this Annual Report.
Item 6. Selected Financial Data
Smaller reporting companies are not required to provide the
information required by this Item.
20
Item 7. 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 audited financial
statements and the notes to those financial statements appearing
elsewhere in this Form 10-K. This discussion and analysis contain
statements of a forward-looking nature relating to future events or
our future financial performance. As a result of many factors, our
actual results may differ materially from those anticipated in
these forward-looking statements. These statements involve known
and unknown risks, uncertainties and other factors that may cause
our actual results, levels of activity, performance or achievements
to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by these
forward-looking statements.
Overview
We are a company formed to commercialize flexible PV modules using
our proprietary technology. For the year ended December 31, 2021 we
generated $607,783 of revenue. Product sales accounted for 100% of
total revenue. As of December 31, 2021, we had an accumulated
deficit of approximately $427,782,788.
In January 2017, Ascent was awarded a contract to supply
high-voltage SuperLight thin-film CIGS PV blankets. These 50W,
fully laminated, flexible blankets were manufactured using a new
process that was optimized for high performance in near-space
conditions at elevated temperatures, and are custom designed for
easy modular integration into series and parallel configurations to
achieve the desired voltage and current required for such
application.
In February 2017 Ascent announced the discontinuation of our
EnerPlex consumer business by disposing of the EnerPlex brand, and
related intellectual properties and trademarks, to our battery
product supplier, Sun Pleasure Co. Limited (“SPCL”). This
transaction was completed in an effort to better allocate our
resources and to continue to focus on our core strength in the
high-value specialty PV market. Following the transfer, Ascent no
longer produces or sells Enerplex-branded consumer products. In
November 2017, Ascent introduced the next generation of our
USB-based portable power systems with the XD™ series. The first
product introduced was the XD-12 which, like previous products, is
a folding, lightweight, easily stowable, PV system with USB power
regulation. Unique to this generation of PV portable power is more
PV power (12 Watts) and a 2.0 Amp smart USB output to enable the
XD-12 to charge most smartphones, tablets, and USB-enabled devices
as fast as a wall outlet. The enhanced smart USB circuit works with
the device to be charged so that the device can determine the
maximum power it is able to receive from the XD-12 and ensures the
best possible charging performance directly from the sun.
Also, in 2017, for a space customer, Ascent manufactured a new
micro-module, approximately 12.8mm x 50mm (0.5in x 2.0in) in size
that is ideal for both laboratory-scale environmental testing, and
for subsequent integration into flight experiments.
In February 2018, the Company introduced the second product in our
XD series. Delivering up to 48 Watts of solar power, the durable
and compact Ascent XD-48 Solar Charger is the ideal solution for
charging many portable electronics and off-grid power systems. The
XD-48’s versatility allows it to charge both military and consumer
electronics directly from the sun wherever needed. Like the XD-12,
the XD-48 has a compact and portable design, and its rugged,
weather-resistant construction withstands shocks, drops, damage and
even minor punctures to power through the harshest conditions.
In March 2018, Ascent successfully shipped to a European based
customer for a lighter-than-air, helium-filled airship project
based on our newly developed ultra-light modules with substrate
material than half of the thickness of our standard modules. In
2019, Ascent completed a repeat order from the same customer who
had since established its airship development operation in the US.
In 2020, we received a third and enlarged order from the same
customer and completed the order in the second quarter of 2021.
Most recently, in the 4th
quarter of 2021 we received a fourth order with a targeted ship
date in the 2nd
quarter of 2022.
We continue to design and manufacture PV integrated portable power
applications for commercial and military users. Due to the high
durability enabled by the monolithic integration employed by our
technology, the capability to customize modules into different form
factors and the industry leading light weight and flexibility
provided by our modules, we believe that the potential applications
for our products are extensive.
21
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 costly back end assembly of inter cell
connections. Traditional PV manufacturers assemble PV modules by
bonding or soldering discrete PV cells together. This manufacturing
step typically increases manufacturing costs and at times proves
detrimental to the overall yield and reliability of the finished
product. By reducing or eliminating this added step using our
proprietary monolithic integration techniques, we believe we can
achieve cost savings in, and increase the reliability of, our PV
modules. All tooling necessary for us to meet our near-term
production requirements is installed in our Thornton, Colorado
plant. In 2012, we further revised our strategy to focus on
applications for emerging and high-value specialty PV markets,
including off grid, aerospace, military and defense and
consumer-oriented products.
We plan to continue the development of our current PV technology to
increase module efficiency, improve our manufacturing tooling and
process capabilities and reduce manufacturing costs. We also plan
to continue to take advantage of research and development contracts
to fund a portion of this development.
Significant Trends, Uncertainties and Challenges
We believe the significant trends, uncertainties and challenges
that directly or indirectly affect our financial performance and
results of operations include:
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Our
ability to generate customer acceptance of and demand for our
products;
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Successful
ramping up of commercial production on the equipment
installed;
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The
substantial doubt about our ability to continue as a going concern
due to our history of operating losses;
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Our
products are successfully and timely certified for use in our
target markets;
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Successful
operating of production tools to achieve the efficiencies,
throughput and yield necessary to reach our cost
targets;
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The
products we design are saleable at a price sufficient to generate
profits;
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Our
ability to raise sufficient capital to enable us to reach a level
of sales sufficient to achieve profitability on terms favorable to
us;
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Effective
management of the planned ramp up of our domestic and international
operations;
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Our
ability to successfully develop and maintain strategic
relationships with key partners, including OEMs, system
integrators, distributors, retailers and e-commerce companies, who
deal directly with end users in our target markets;
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Our
ability to maintain the listing of our common stock on the OTC
Markets;
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Our
ability to maintain effective internal controls over financial
reporting;
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Our
ability to achieve projected operational performance and cost
metrics;
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Our
ability to enter into commercially viable licensing, joint venture,
or other commercial arrangements;
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Availability
of raw materials; and
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COVID-19
and the uncertainty around the continued duration and effect of the
worldwide pandemic.
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Basis of Presentation: The
discussion and analysis of our financial condition and results of
operations are based on our consolidated financial statements,
which have been prepared in accordance with accounting principles
generally accepted in the United States (“US GAAP” or “GAAP”). The
preparation of these consolidated 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. On an ongoing basis, we
evaluate our estimates based on historical experience and on
various other assumptions that are believed to be reasonable under
the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that
are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or
conditions. We have identified the policies below as critical to
our business operations and to the understanding of our financial
results:
22
Significant Accounting Policies
Inventories: All inventories are
stated at the lower of cost or net realizable value, with cost
determined using the weighted average method. Inventory balances
are frequently evaluated to ensure they do not exceed net
realizable value. The computation for net realizable value takes
into account many factors, including expected demand, product life
cycle and development plans, module efficiency, quality issues,
obsolescence and others. Management's judgment is required to
determine reserves for obsolete or excess inventory. If actual
demand and market conditions are less favorable than those
estimated by management, additional inventory write downs may be
required.
Impairment of Long-lived assets: We analyze our long-lived assets (property,
plant and equipment) and definitive-lived intangible assets
(patents) for impairment, both individually and as a group,
whenever events or changes in circumstances indicate the carrying
amount of the assets may not be recoverable. Events that might
cause impairment would include significant current period operating
or cash flow losses associated with the use of a long-lived asset
or group of assets combined with a history of such losses,
significant changes in the manner of use of assets and significant
negative industry or economic trends. An undiscounted cash flow
analysis is calculated to determine if an impairment exists. If an
impairment is determined to exist, any related loss is calculated
using the difference between the fair value and the carrying value
of the assets.
Convertible Preferred Stock: The
Company evaluates its preferred stock instruments under FASB ASC
480, "Distinguishing Liabilities
from Equity" to determine
the classification, and thereby the accounting treatment, of the
instruments. Please refer to Notes 13 and 14 for further discussion
on the classification of each instrument.
Derivatives: The Company
evaluates its financial instruments under FASB ASC 815,
"Derivatives
and Hedging" to determine
whether the instruments contain an embedded derivative. When an
embedded derivative is present, the instrument is evaluated for a
fair value adjustment upon issuance and at the end of every period.
Any adjustments to fair value are treated as gains and losses in
fair values of derivatives and are recorded on the Statement of
Operations. Please refer to Notes 10 and 11 for further discussion
on the embedded derivatives of each instrument.
Paycheck Protection Program Loan: The Company has elected to account for the
forgivable loan received under the Paycheck Protection Program
(“PPP”) provisions of the Coronavirus Aid, Relief, and Economic
Security (“CARES”) Act as a debt instrument and to accrue interest
on the outstanding loan balance. Additional interest at a market
rate (due to the stated interest rate of the PPP loan being below
market) is not imputed, as the transactions where interest rates
prescribed by governmental agencies are excluded from the scope of
accounting guidance on imputing interest. The proceeds from the
loan will remain recorded as a liability until either (1) the loan
is, in part of wholly, forgiven and the Company has been legally
released or (2) the Company repays the loan to the lender. On
September 4, 2021, the Company received notification from Vectra
that the Small Business Administration has forgiven the PPP loan
and the liability was recognized as other
income.
Revenue Recognition:
Product revenue. We recognize
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, we allocate the transaction price to each performance
obligation identified in the contract based on relative standalone
selling prices, or estimates of such prices, and recognize the
related revenue as control of each individual product is
transferred to the customer.
Milestone
revenue. Each
milestone 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 or cost targets and
engineering targets.
Government contract revenue. Revenue from government research and
development contracts is generated under terms that are cost plus
fee or firm fixed price. We generally recognize this revenue over
time using cost-based input methods, which recognize 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, we use 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.
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Cost based input methods of revenue recognition are considered a
faithful depiction of our 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 our performance obligations are
excluded from our input methods of revenue recognition as the
amounts are not reflective of our 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.
Research, Development and Manufacturing Operations Costs:
Research, development and
manufacturing operations expenses include: 1) technology
development costs, which include expenses incurred in researching
new technology, improving existing technology and performing
federal government research and development contracts, 2) product
development costs, which include expenses incurred in developing
new products and lowering product design costs, and 3)
pre-production and production costs, which include engineering
efforts to improve production processes, material yields and
equipment utilization, and manufacturing efforts to produce
saleable product. Research, development and manufacturing
operations costs are expensed as incurred, with the exception of
costs related to inventoried raw materials, work-in-process and
finished goods, which are expensed as Cost of revenue as products
are sold.
Recently Issued Accounting Standards
In August 2020, the FASB issued 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 will simplify the accounting
for convertible instruments by reducing the number of accounting
models for convertible debt instruments and convertible preferred
stock. Limiting the accounting models results in fewer embedded
conversion features being separately recognized from the host
contract as compared with current GAAP. Convertible instruments
that continue to be subject to separation models are (1) those with
embedded conversion features that are not clearly and closely
related to the host contract, that meet the definition of a
derivative, and that do not qualify for a scope exception from
derivative accounting and (2) convertible debt instruments issued
with substantial premiums for which the premiums are recorded as
paid-in capital. ASU 2020-06 also amends the guidance for the
derivatives scope exception for contracts in an entity’s own equity
to reduce form-over-substance-based accounting conclusions.
ASU 2020-06 will be effective for public companies that are
smaller reporting companies for fiscal years beginning after
December 15, 2023, including interim periods within those fiscal
years. Early adoption is permitted, but no earlier than fiscal
years beginning after December 15, 2020, including interim periods
within those fiscal years. Management has not yet evaluated the
impact that the adoption of ASU 2020-06 will have on the
Company’s consolidated financial statement presentation or
disclosures.
Other new pronouncements issued but not effective as of
December 31, 2021 are not expected to have a material impact
on the Company’s consolidated financial statements.
24
Results of Operations
Comparison of the Years Ended December 31, 2021 and 2020
|
|
Year Ended December 31,
|
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
|
$ Change
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Product Revenue
|
|
|
607,783
|
|
|
|
66,613
|
|
|
|
541,170
|
|
Total Revenues
|
|
|
607,783
|
|
|
|
66,613
|
|
|
|
541,170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Revenue
|
|
|
1,902,414
|
|
|
|
174,588
|
|
|
|
1,727,826
|
|
Research, development and
manufacturing operations
|
|
|
4,140,319
|
|
|
|
1,165,193
|
|
|
|
2,975,126
|
|
SG&A
|
|
|
3,297,982
|
|
|
|
1,029,720
|
|
|
|
2,268,262
|
|
Depreciation
|
|
|
57,314
|
|
|
|
151,658
|
|
|
|
(94,344
|
)
|
Total Costs and Expenses
|
|
|
9,398,029
|
|
|
|
2,521,159
|
|
|
|
6,876,870
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss From Operations
|
|
|
(8,790,246
|
)
|
|
|
(2,454,546
|
)
|
|
|
(6,335,700
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income/(Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income/(Expense), net
|
|
|
(169,423
|
)
|
|
|
3,002,170
|
|
|
|
(3,171,593
|
)
|
Interest Expense
|
|
|
(1,088,327
|
)
|
|
|
(3,507,533
|
)
|
|
|
2,419,206
|
|
Change in fair value of derivatives and
gain on extinguishment of liabilities
|
|
|
4,047,993
|
|
|
|
4,577,353
|
|
|
|
(529,360
|
)
|
Total Other Income
|
|
|
2,790,243
|
|
|
|
4,071,990
|
|
|
|
(1,281,747
|
)
|
Net Income/(Loss)
|
|
|
(6,000,003
|
)
|
|
|
1,617,444
|
|
|
|
(7,617,447
|
)
|
Revenues. Our revenues increased
by $541,170, or 812%, for the year ended December 31, 2021
when compared to the same period in 2020. The increase in sales is
due primarily increased operations in the current year. During
2020, the Company was in a dormant status for the most part of the
year as the focus in 2020 was to recapitalize and restructure the
Company’s balance sheet. The intensification of the COVID-19
pandemic since March 2020 also significantly impacted our
restructuring effort, thereby delaying our ability to restart our
operations in a timely manner.
Cost of revenues. Cost of revenues
is comprised primarily of repair and maintenance, direct labor and
overhead expenses. Our cost of revenues increased by $1,727,826, or
990%, for the year ended December 31, 2021 when compared to
the same period in 2020. The increase in cost of revenues is mainly
due to the increase in repair and maintenance, materials, and labor
costs as a result of increased production and restarting equipment
for the year ended December 31, 2021 compared to 2020. Management
believes our factory is currently significantly under-utilized, and
a substantial increase in revenue would result in marginal
increases to direct labor and overhead included in the cost of
revenues. As such, management’s focus going forward is to improve
gross margin through increased sales and improved utilization of
our factory.
Research, development and manufacturing operations. Research, development and manufacturing
operations costs include costs incurred for product development,
pre-production and production activities in our manufacturing
facility. Research, development and manufacturing operations costs
also include costs related to technology development and
governmental contracts. Research, development and manufacturing
operations costs increased by $2,975,126 or 255%, for the year
ended December 31, 2021 when compared to the same period in
2020. The increase in cost is due primarily to increased operations
in the current year as compared to the Company’s dormant status in
the prior year.
Selling, general and administrative. Selling, general and administrative expenses
increased by $2,268,262, or 220%, for the year ended
December 31, 2021 when compared to the same period in 2020.
The increase in costs is due primarily to an increased level of
operations in the current period as compared to the Company’s
dormant status in 2020.
Other Income. Other income
decreased by $1,281,747 or 31%, for the year ended
December 31, 2021 when compared to the same period in 2020. In
2020, the Company recognized approximately $3 million gain on the
sale of our facility with no similar transaction in the current
year. This is partially offset by the decrease in interest expense
in the current year as the Company restructured its debt in late
2020.
25
Net
Income/(Loss). Our
Net Loss was $6,000,003 for the year ended December 31, 2021, compared
to Net Income of $1,617,444 for the year ended December 31, 2020, a
reduction of $7,617,447. The
reduction is due to the reasons described above.
Liquidity and Capital Resources
The Company has continued limited PV production at its
manufacturing facility. The Company does not expect that sales
revenue and cash flows will be sufficient to support operations and
cash requirements until it has fully implemented its product
strategy. During the year ended December 31, 2021 the Company
used $9,404,443 in cash for operations.
Additional projected product revenues are not anticipated to result
in a positive cash flow position for the year 2022 overall and, as
of December 31, 2021, the Company has working capital of
$3,799,806; however additional financing will be required for us to
reach a level of sufficient sales to achieve profitability.
The Company continues to accelerate sales and marketing efforts
related to its military solar products and specialty PV application
strategies through expansion of its sales and distribution
channels. The Company continues activities to secure additional
financing through strategic or financial investors, but there is no
assurance the Company will be able to raise additional capital on
acceptable terms or at all. If the Company's revenues do not
increase rapidly, and/or additional financing is not obtained, the
Company will be required to significantly curtail operations to
reduce costs and/or sell assets. Such actions would likely have an
adverse impact on the Company's future operations.
As a result of the Company’s recurring losses from operations, and
the need for additional financing to fund its operating and capital
requirements, there is uncertainty regarding the Company’s ability
to maintain liquidity sufficient to operate its business
effectively, which raises substantial doubt as to the Company’s
ability to continue as a going concern. The Company has scaled down
its operations, due to cash flow issues, and does not expect to
ramp up until significant financing is obtained.
Management cannot provide any assurances that the Company will be
successful in accomplishing any of its plans. These consolidated
financial statements do not include any adjustments that might be
necessary should the Company be unable to continue as a going
concern.
Statements of Cash Flows Comparison of the Years Ended
December 31, 2021 and 2020
For the year ended December 31, 2021, our cash used in
operations was $9,404,443 compared to $2,884,919 for the year ended
December 31, 2020, an increase of $6,519,524. The increase is
primarily the result of scaling up operations during 2021 as
compared to the Company’s dormant status for most of 2020. For the
year ended December 31, 2021, cash used in investing
activities was $301,522 compared to cash provided by investing
activities of $254,444 for the year ended December 31, 2020.
This change was primarily the result of a decrease in proceeds from
the sale of assets. During the year ended December 31, 2021,
negative operating cash flows of $9,404,443 were primarily
funded through $15,500,000 in proceeds from issuances of preferred
and common stock.
Off Balance Sheet Transactions
As of December 31, 2021, we did not have any off-balance sheet
arrangements as defined in Item 303(a)(4)(ii) of Regulation
S-K.
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk
Foreign Currency Exchange Risk
We hold no significant funds and have no future obligations
denominated in foreign currencies as of December 31, 2021.
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.
26
Interest Rate Risk
Our exposure to market risks for changes in interest rates relates
primarily to our cash equivalents and investment portfolio. As of
December 31, 2021, our cash equivalents consisted only of
operating accounts held with financial institutions. From time to
time, we 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 8. Financial Statements and Supplementary Data
The Financial Statements and Supplementary Data required by this
item are included in Part IV, Item 15(a)(1) and are presented
beginning on Page F-1.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
Item 9A. 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 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
December 31, 2021. Based on this evaluation, our management
concluded the design and operation of our disclosure controls and
procedures were effective as of December 31, 2021.
Management’s Report on Internal Control over Financial
Reporting
Our management is responsible for establishing and maintaining
adequate internal control over financial reporting, as defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our system of
internal control over financial reporting is designed 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 in the United States of America and includes those
policies and procedures that:
|
•
|
pertain
to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of
our assets;
|
|
•
|
provide
reasonable assurance transactions are recorded as necessary to
permit preparation of financial statements in accordance with
generally accepted accounting principles, and our receipts and
expenditures are being made only in accordance with authorizations
of our management and directors; and
|
|
•
|
provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that
could have a material effect on our financial
statements.
|
Under the supervision of the Audit Committee of the Board of
Directors and with the participation of our management, including
our Chief Executive Officer, we engaged an independent third party
firm and conducted an evaluation of the effectiveness of our
internal control over financial reporting using the criteria
established in Internal Control - Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). Based on this evaluation, our management
concluded our internal control over financial reporting were
effective as of December 31, 2021. Our management reviewed the
results of its assessment with the Audit Committee.
27
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
A material weakness is a deficiency, or combination of
deficiencies, in internal control over financial reporting such
that there is a reasonable possibility that a material misstatement
of the Company’s annual or interim financial statements will not be
prevented or detected on a timely basis.
Material Weakness Identified in 2020
As disclosed in Item 9A, “Controls and Procedures,” of the
Company’s Annual Report on Form 10-K for the year
ended December 31, 2020, management concluded that a
material weakness existed in its internal control over financial
reporting as it related to the lack of accounting resourcing with
technical expertise to ensure that all Company transactions were
accounted for in accordance with US GAAP. Specifically, the
Company’s controls to ensure that appropriate accounting for the
Company’s inventory and cost of revenue and the Company’s
accounting for complex debt and equity securities transactions were
not designed at a sufficient level of precision to mitigate the
risk of material misstatement.
Remediation of Material Weaknesses in Internal Control over
Financial Reporting
The Company’s financial challenges faced in 2020 subsided as cash
flows improved during the year ended December 31, 2020 and began to
bring the Company into operating status. The Company executed the
following steps to remediate the aforementioned material weakness
in its internal controls over financial reporting:
|
•
|
The
Company hired a new Chief Financial Officer during the fourth
quarter of 2020 and a new Controller with a strong financial
statement audit and technical accounting background during the
second quarter of 2021. The Company’s Controller, acting in
coordination with the Company’s CFO, were both highly involved in
implementing and monitoring internal controls over the Company’s
quarterly financial reporting including the oversight of controls
specifically related to the Company’s inventory activities, cost of
revenue allocations, and accounting for the Company’s debt and
equity securities, supervising the accounting staff involved in the
Company’s quarterly financial reporting, and identifying,
monitoring, and resolving accounting issues as raised throughout
the Company’s ongoing activities.
|
|
•
|
The
Company significantly reduced the complexity of the debt structure
through consolidation and simplifying of terms thereby lowering the
associated administration and cost burden.
|
|
•
|
The
Company engaged an external resource with the technical expertise
to assist in documenting and testing internal controls under
Section 302 and 404 of the Sarbanes Oxley Act of 2002.
|
The substantial elimination of the complexities in the Company’s
debt and securities accounting along with the above changes in
internal controls over financial reporting during the year ended
December 31, 2021, have materially improved the Company’s internal
control over financial reporting, and have effectively remediated
the Company’s prior material weaknesses as previously disclosed
above.
Changes in Internal Control Over Financial Reporting
Except for the identification and mitigation of the material
weaknesses noted above, there were no other changes in internal
control over financial reporting during the year ended
December 31, 2021 that have materially affected, or are
reasonably likely to materially affect, our internal control over
financial reporting.
Item 9B.
Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that
Prevent Inspections
Not applicable.
28
PART III
Item 10. Directors, Executive Officers and Corporate
Governance
EXECUTIVE OFFICERS AND DIRECTORS
Our executive officers, continuing directors and director nominees,
their ages and positions with us as of March 14, 2022, are as
follows:
Name
|
|
Age
|
|
|
Position
|
Victor Lee
|
|
|
54
|
|
|
President and Chief Executive Officer, Director
|
Michael J. Gilbreth
|
|
|
45
|
|
|
Chief Financial Officer
|
Amit Kumar, Ph.D.
|
|
|
57
|
|
|
Chairman of the Board, Director
|
David Peterson
|
|
|
52
|
|
|
Director
|
Kim J. Huntley
|
|
|
67
|
|
|
Director
|
Will A. Clarke
|
|
|
54
|
|
|
Director
|
Victor Lee (Lee Kong Hian) has
been the President and Chief Executive Officer of Ascent Solar
Technologies Inc. since February 1, 2012 and a member of our
Board since November 2011. Mr. Lee joined HF Foods Group Inc.
(NASDAQ:HFFG) as Vice President, Chief Corporate Finance and
Strategy Officer in December 2019 and was promoted to Executive
Vice President and Chief Financial Officer in May 2020. He brings
more than 25 years of experience in strategic planning, sales &
marketing, corporate finance, real estate finance and investment
management, and corporate advisory services at leading worldwide
financial institutions. Mr. Lee began his career at Citibank N.A.,
in 1993, handling small-and medium-sized corporate finance and
progressed to a vice president position in the International
Personal Banking Division. In 1999 he moved to Deutsche Bank AG as
Vice President and in 2004 was promoted to managing director
Singapore Market Head in the Private Wealth Management Division,
where he was responsible for management of approximately $1 Billion
in assets. From 2007 until 2009, he was with Morgan Stanley Private
Wealth Management, most recently as executive director and head of
Singapore/Malaysia markets. Mr. Lee holds a Bachelor's degree in
Accounting from the University of Wisconsin and a Master's in
Wealth Management from the Singapore Management University. We
believe Mr. Lee is well-qualified to serve as a director due to his
business experience and his comprehensive knowledge of the
Company.
Michael J. Gilbreth has been Chief
Financial Officer of Ascent Solar Technologies Inc. since October
2020. Mr. Gilbreth is a financial executive with more than 15 years
of experience in accounting and business management, consumer
packaged goods, e-commerce, and financial consulting. In April
2020, Mr. Gilbreth formed a financial consulting company, PVMG
Advisors, Inc., which provides financial and business consulting
services. While at PVMG, Mr. Gilbreth provided consulting services
to Crowdex Investment, LLC in connection with the Company’s recent
restructuring and recapitalization process. Previously, from 2015
to January 2020, Mr. Gilbreth was Vice President of Finance at
Candy Club Holding Limited (ASX: CLB) headquartered in Los Angeles,
California. Candy Club is a leading specialty market confectionery
company which operates in the business-to-business (B2B) and
business-to-customer (B2C) segments in the United States. In this
lead finance role at Candy Club, Mr. Gilbreth supported the
company’s capital raising activities, including a successful
initial public offering on the Australian Stock Exchange (ASX) in
February 2019. From 2013 to 2015, Mr. Gilbreth operated Gilbreth
Consulting, which provides financial and operational management
consulting services, and strategic and operational planning
services. From 2010 to 2013, Mr. Gilbreth was VP/Finance at
MediaTrust, a performance marketing company based in southern
California. From 2005 to 2010, Mr. Gilbreth was a business manager
at Duban Sattler and Associates LLP, a boutique tax accounting and
business management firm based in southern California which
represents high net worth individuals. Mr. Gilbreth holds a
Bachelor’s degree in Business Administration from California State
University, Chico. Mr. Gilbreth and David Peterson are
cousins.
Amit Kumar, Ph.D. has served on
our Board since June 2007 and as Chairman since January 2011. Dr.
Kumar is currently Chairman, President and CEO of Anixa Biosciences
(NASDAQ:ANIX), a publicly held biotechnology company. From December
2010 to June 2015, Dr. Kumar was President and CEO of Geo Fossil
Fuels, a privately held energy company. From September 2001 until
June 30, 2010, Dr. Kumar was President and CEO of CombiMatrix
Corporation (NASDAQ: CBMX). Previously, Dr. Kumar was Vice
President of Life Sciences of Acacia Research Corp (NASDAQ: ACTG).
From January 1999 to February 2000, Dr. Kumar was the founding
President and Chief Executive Officer of Signature BioSciences,
Inc., a life science company developing technology for advanced
research in genomics, proteomics and drug discovery. From January
1998 to December 1999, Dr. Kumar was an Entrepreneur in Residence
with Oak Investment Partners, a venture capital firm. From October
1996 to January 1998, Dr. Kumar was a Senior Manager at IDEXX
Laboratories, Inc., a biotechnology company.
29
From October 1993 to September
1996, Dr. Kumar was Head of Research & Development for
Idetek Corporation, which was later acquired by IDEXX
Laboratories, Inc. Dr. Kumar received his B.S. degree in chemistry
from Occidental College. After joint studies at Stanford University
and the California Institute of Technology, he received his Ph.D.
in Chemistry from Caltech in 1991. He also completed a
post-doctoral fellowship at Harvard University in 1993. Dr. Kumar
has authored and co-authored over 40 peer-reviewed publications and
holds a dozen patents. Dr. Kumar brings significant leadership
experience as well as experience in photovoltaic research including
work on energy conversion using cells made from silicon (single
crystal, polycrystalline, and amorphous), gallium arsenide, indium
phosphide, metal oxides and other materials. Dr. Kumar is a member
of the board of directors of Actym Therapeutics, a private biotechnology company.
We believe Mr. Kumar is well-qualified to serve as a director due
to his experience as a director and executive of several public and
private companies.
Kim J. Huntley has served on our
Board since June 2010. Mr. Huntley served in the Defense Logistics
Agency (DLA) of the U.S. Department of Defense (DOD) for more than
32 years in positions of increasing responsibility. Most recently,
from July 2008 until his retirement in January 2010, Mr. Huntley
served as Director of the Defense Energy Support Center (DESC) in
Fort Belvoir, Virginia. The DESC operates as part of the DLA and is
responsible for providing energy solutions to the DOD and federal
civilian agencies. As Director of the DESC, Mr. Huntley was the
principal executive officer in charge of approximately 1,100
employees worldwide and over $25 billion in annual appropriations
involving energy infrastructure and products. From March 2006 and
immediately prior to becoming Director of the DESC, Mr. Huntley
served in leadership roles involving supply chain management,
including Deputy Commander for the Defense Supply Center in
Richmond, Virginia and Columbus, Ohio, and as Executive Director of
Customer Support and Readiness. From December 2003 to March 2006,
Mr. Huntley served as Chief of the Customer Support Office in Fort
Belvoir, Virginia. Mr. Huntley chaired the Inter Agency Working
Group for Alternative Fuels and Renewable Energy from January 2009
to January 2010. The Group included senior energy representatives
from DOD, DOE, EPA, and other major Federal Agencies. Mr. Huntley
holds a B.A. degree in Economics from Golden Gate University and
attended post-graduate courses in economics at California State
University, Hayward. Mr. Huntley brings extensive supply chain,
budget and defense industry experience to our Board. We believe Mr.
Huntley is well-qualified to serve as a director due to his
extensive experience in the public sector.
David Peterson has served on our
Board since December 2020. Mr. Peterson has over 25 years of
business management experience, including 8 years as a private
equity investor, 5 years as a manager at an engineering consulting
firm, and over 20 years of board experience. From April 2015 to
present, Mr. Peterson has worked for EPD Consultants, Inc., a
privately held engineering firm headquartered in Carson,
California, where he serves as Senior Project Manager. From 2010 to
2015, Mr. Peterson was President and Co-Founder of Great Circle
Industries, Inc., a water recycling company in southern
California. His past experience includes being a board
member at AIR-serv, LLC, a tire inflation vending machine
manufacturer, where Mr. Peterson managed the acquisition process,
including obtaining expansion of the company's credit facility, as
that company completed 10 acquisitions and grew from $10 million of
EBITDA to $20 million of EBITDA in the year prior to its sale for
$151 million to WindPoint Partners. Mr. Peterson has an
MBA degree from the Marshall School of Business at the University
of Southern California, and a B.A. from the University of
California, Santa Cruz. Mr. Peterson is currently the
Manager of Crowdex Investment, LLC, a significant equity investor
in the Company. Mr. Peterson and Michael J. Gilbreth are
cousins. We believe Mr. Peterson is well-qualified to serve as a
director due to his extensive management and board
experience.
Will A. Clarke has served on our
Board since December 2020. Since 2020, Mr. Clarke has been the
Founder and President of Clarke Growth and Sustainment Strategies,
an advisory firm specializing in guiding startup and early stage
companies’ business expansion. From 2018 to 2020, Mr. Clarke was
Head of Global Supply Chain Management and Technical Procurement
for Atlas Airlines Worldwide Holdings, Inc. (NASDAQ: AAWW), a
leading global provider of outsourced aircraft and aviation
operating services headquartered in Purchase, NY. From 2015 to
2017, Mr. Clarke was Director of Procurement at Best Buy Co., Inc.
(NYSE: BBY), a provider of technology products, services and
solutions to its customers through over 1,400 retail stores, and
also through its websites and mobile applications. Best Buy is
headquartered in Richfield, MN and has operations in the United
States, Canada and Mexico. Prior to launching his second
career in 2015, Mr. Clarke served 25 years as an Officer in the
U.S. Navy, where he completed 10 deployments in support of war and
peacetime operations on two aircraft carriers, one submarine, one
warship and one on land. Mr. Clarke served in a number of senior
finance, supply chain, procurement and logistics assignments across
East Africa, Asia/Pacific, and the United States while serving in
the U.S. Navy, where he attained the rank of Captain (O6). Mr.
Clarke earned a B.S. in Mathematics from the U.S. Naval Academy, an
M.S. in Finance and Contracts Management from the Naval
Postgraduate School and has completed the Executive Development
Program at Wharton Business School and the Corporate Governance
Program at Columbia Business School. We believe Mr. Clarke is
well-qualified to serve as a director due to his knowledge and
business experience.
30
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors, executive
officers, and persons holding more than 10% of our common stock to
report their initial ownership of the common stock and other equity
securities and any changes in that ownership in reports that must
be filed with the SEC. The SEC has designated specific deadlines
for these reports, and we must identify in our Annual Report on
Form 10-K those persons who did not file these reports when
due.
Based solely on a review of reports furnished to us, or written
representations from reporting persons, we believe all directors,
executive officers, and 10% owners timely filed all reports
regarding transactions in our securities required to be filed in
2020 or 2021 by Section 16(a) under the Exchange Act, except that
(i) Mr. Gilbreth and Crowdex each filed a late Form 3 in 2020, (ii)
TubeSolar filed a late Form 3 in 2021, and (iii) BD1 and TubeSolar
each filed one late Form 4 in 2021.
31
CORPORATE GOVERNANCE
Overview
Our Bylaws provide that the size of our Board of Directors is to be
determined from time to time by resolution of the Board of
Directors, but shall consist of at least two and no more than nine
members. Our Board of Directors currently consists of five members.
The Board has determined that the following directors are
“independent” as required by the listing standards of the OTC
Markets and by our corporate governance guidelines: Dr. Kumar, Mr.
Huntley and Mr. Clarke.
Our Certificate of Incorporation provides that the Board of
Directors will be divided into three classes. Our Class 1 director
is Dr. Amit Kumar. Our Class 2 directors are Kim J. Huntley and
Will A. Clarke. Our Class 3 directors are David Peterson and Victor
Lee.
Board Leadership Structure and Role in Risk Oversight
We currently separate the roles of Chairman of the Board and Chief
Executive Officer. We believe that Dr. Kumar possesses the
strategic, technical and industry knowledge and expertise to serve
as our Chairman. As President and Chief Executive Officer, Mr. Lee
is responsible for day-to-day oversight of our operations and
personnel. Notwithstanding the foregoing, our Board does not have a
formal policy regarding separation of the Chairman and Chief
Executive Officer roles, and the Board may in the future decide to
implement such a policy if it deems it in the best interests of us
and our stockholders. The Board does not have a lead independent
director.
Risk is inherent with every business, and how well a business
manages risk can ultimately determine its success. We face a number
of risks, including credit risk, interest rate risk, liquidity
risk, operational risk, strategic risk and reputation risk.
Management is responsible for the day-to-day management of risks we
face, while the Board, as a whole and through its committees, has
responsibility for the oversight of risk management. In its risk
oversight role, the Board of Directors has the responsibility to
satisfy itself that the risk management processes designed and
implemented by management are adequate and functioning as designed.
To do this, the Chairman of the Board meets regularly with
management to discuss strategy and the risks we face. In addition,
the Audit Committee regularly monitors our enterprise risk,
including financial risks, through reports from management. Senior
management attends the Board meetings and is available to address
any questions or concerns raised by the Board on risk management
and any other matters. The Chairman of the Board and independent
members of the Board work together to provide strong, independent
oversight of our management and affairs through the Board’s
standing committees and, when necessary, executive sessions of the
independent directors.
Committees of the Board of Directors
Our Board has three standing committees: an Audit Committee, a
Compensation Committee, and a Nominating and Governance Committee.
Each committee operates pursuant to a charter. The charters of the
Audit Committee, the Compensation Committee, and the Nominating and
Governance Committee can be found on our website
www.ascentsolar.com.
Audit Committee. Our Audit Committee
oversees our accounting and financial reporting processes, internal
systems of accounting and financial controls, relationships with
independent auditors, and audits of financial statements. Specific
responsibilities include the following:
|
•
|
selecting,
hiring and terminating our independent auditors;
|
|
•
|
evaluating
the qualifications, independence and performance of our independent
auditors;
|
|
•
|
approving
the audit and non-audit services to be performed by our independent
auditors;
|
|
•
|
reviewing
the design, implementation, adequacy and effectiveness of our
internal controls and critical accounting policies;
|
|
•
|
reviewing
and monitoring the enterprise risk management process;
|
|
•
|
overseeing
and monitoring the integrity of our financial statements and our
compliance with legal and regulatory requirements as they relate to
financial statements or accounting matters;
|
32
|
•
|
reviewing,
with management and our independent auditors, any earnings
announcements and other public announcements regarding our results
of operations; and
|
|
•
|
preparing
the report that the SEC requires in our annual proxy
statement.
|
Our Audit Committee is comprised of Mr. Huntley, Dr. Kumar and Mr.
Clarke. Mr. Huntley serves as Chairman of the Audit Committee. The
Board has determined that all members of the Audit Committee are
independent under the rules of the OTC Markets, and that Mr.
Huntley qualifies as an “audit committee financial expert,” as
defined by the rules of the SEC.
Compensation Committee. Our Compensation Committee
assists our Board in determining the development plans and
compensation of our officers, directors and employees.
Specific responsibilities include the following:
|
•
|
approving
the compensation and benefits of our executive officers;
|
|
•
|
reviewing
the performance objectives and actual performance of our officers;
and
|
|
•
|
administering
our stock option and other equity compensation plans.
|
The Compensation Committee reviews all components of compensation
including base salary, bonus, equity compensation, benefits and
other perquisites. In addition to reviewing competitive market
values, the Compensation Committee also examines the total
compensation mix, pay-for-performance relationship and how all
elements, in the aggregate, comprise the executives’ total
compensation package. The CEO makes recommendations to the
Compensation Committee from time to time regarding the appropriate
mix and level of compensation for other officers. Those
recommendations consider the objectives of our compensation
philosophy and the range of compensation programs authorized by the
Compensation Committee. The Compensation Committee may determine
director compensation by reviewing peer group data. Although the
Compensation Committee has the authority to retain outside third
parties, it does not currently utilize any outside consultants. The
Compensation Committee may delegate certain of its
responsibilities, as it deems appropriate, to other committees or
officers.
Our Compensation Committee is comprised of Mr. Clarke, Mr. Huntley
and Dr. Kumar. Mr. Clarke serves as Chairman of the Compensation
Committee.
Our Board has determined that all members of the Compensation
Committee are independent under the rules of the Nasdaq Capital
Market and OTC Markets.
Nominating and Governance Committee. Our Nominating and
Governance Committee assists our Board by identifying and
recommending individuals qualified to become members
of our Board, reviewing correspondence from our stockholders, and
establishing, evaluating and overseeing our corporate governance
guidelines. Specific responsibilities include the
following:
|
•
|
evaluating
the composition, size and governance of our Board and its
committees and making recommendations regarding future planning and
the appointment of directors to our committees;
|
|
•
|
establishing
a policy for considering stockholder nominees for election to our
Board; and
|
|
•
|
evaluating
and recommending candidates for election to our Board.
|
Our Nominating and Governance Committee is comprised of Dr. Kumar,
Mr. Huntley, and Mr. Clarke. Dr. Kumar serves as Chairman of our
Nominating and Governance Committee. Our Board has determined that
all members of the Nominating and Governance Committee are
independent under the rules of Nasdaq Capital Market and OTC
Markets.
When considering potential director candidates for nomination or
election, the following characteristics are considered in
accordance with our Nominating and Governance Committee
Charter:
|
•
|
high
standard of personal and professional ethics, integrity and
values;
|
|
•
|
training,
experience and ability at making and overseeing policy in business,
government and/or education sectors;
|
|
•
|
willingness
and ability to keep an open mind when considering matters affecting
interests of us and our constituents;
|
33
|
•
|
willingness
and ability to devote the time and effort required to effectively
fulfill the duties and responsibilities related to the Board and
its committees;
|
|
•
|
willingness
and ability to serve on the Board for multiple terms, if nominated
and elected, to enable development of a deeper understanding of our
business affairs;
|
|
•
|
willingness
not to engage in activities or interests that may create a conflict
of interest with a director’s responsibilities and duties to us and
our constituents; and
|
|
•
|
willingness
to act in the best interests of us and our constituents, and
objectively assess Board, committee and management
performances.
|
In addition, in order to maintain an effective mix of skills and
backgrounds among the members of our Board, the following
characteristics also may be considered when filling vacancies or
identifying candidates:
|
•
|
diversity
(e.g., age, geography, professional, other);
|
|
•
|
professional
experience;
|
|
•
|
industry
knowledge (e.g., relevant industry or trade association
participation);
|
|
•
|
skills
and expertise (e.g., accounting or financial);
|
|
•
|
public
company board and committee experience;
|
|
•
|
non-business-related
activities and experience (e.g., academic, civic, public
interest);
|
|
•
|
continuity
(including succession planning);
|
|
•
|
number
and type of committees, and committee sizes; and
|
|
•
|
legal
and other applicable requirements and recommendations, and other
corporate governance-related guidance regarding Board and committee
composition.
|
The Nominating and Governance Committee will consider candidates
recommended by stockholders who follow the nomination procedures in
our bylaws. The Nominating and Governance Committee does not have a
formal policy with respect to diversity; however, as noted above,
the Board and the Nominating and Governance Committee believe that
it is essential that Board members represent diverse
viewpoints.
Number of Meetings
The Board held a total of six meetings in 2021. Our Audit Committee
held ten meetings, our Compensation Committee held five meetings,
and our Nominating and Governance Committee held four meetings in
2021. Each director attended at least 75% of the aggregate of the
total number of meetings of the Board and the Board committees on
which he served.
Board Member Attendance at Annual Stockholder Meetings
Although we do not have a formal policy regarding director
attendance at annual stockholder meetings, directors are encouraged
to attend these annual meetings absent extenuating circumstances.
We did not hold our annual meeting during 2021 or 2020.
Stockholder Nominations
In accordance with our Bylaws, a stockholder wishing to nominate a
director for election at an annual or special meeting of
stockholders must timely submit a written proposal of nomination to
us at our executive offices. To be timely, a written proposal of
nomination for an annual meeting of stockholders must be received
at least 90 calendar days but no more than 120 calendar days before
the first anniversary of the date on which we held our annual
meeting of stockholders in the immediately preceding year;
provided, however, that in the event that the
date of the annual meeting is advanced or delayed more than 30
34
calendar days from the anniversary of the annual meeting of
stockholders in the immediately preceding year, the written
proposal must be received: (i)
at least 90 calendar days but no more than 120 calendar days prior
to the date of the annual meeting; or (ii) no more than 10 days
after the date we first publicly announce the date of the annual
meeting. A written proposal of nomination for a special meeting of
stockholders must be received no earlier than 120 calendar days
prior to the date of the special meeting nor any later than the
later of: (i)
90 calendar days prior to the date of the special meeting; and (ii)
10 days after the date we first publicly announce the date of the
special meeting.
Each written proposal for a nominee must contain: (i) the name,
age, business address and telephone number, and residence address
and telephone number of the nominee; (ii) the current principal
occupation or employment of each nominee, and the principal
occupation or employment of each nominee for the prior ten (10)
years; (iii) a complete list of companies, whether publicly traded
or privately held, on which the nominee serves (or, during any of
the prior ten (10) years, has served) as a member of the board of
directors; (iv) the number of shares of our common stock that are
owned of record and beneficially by each nominee; (v) a statement
whether the nominee, if elected, intends to tender, promptly
following such person’s failure to receive the required vote for
election or reelection at the next meeting at which the nominee
would face election or reelection, an irrevocable resignation
effective upon acceptance of such resignation by the Board; (vi) a
completed and signed questionnaire, representation and agreement
relating to voting agreements or commitments to which the nominee
is a party; (vii) other information concerning the nominee that
would be required in a proxy statement soliciting the nominee’s
election; and (viii) information about, and representations from,
the stockholder making the nomination.
A stockholder interested in submitting a nominee for election to
the Board of Directors should refer to our Bylaws for additional
requirements. Upon receipt of a written proposal of nomination
meeting these requirements, the Nominating and Governance Committee
of the Board will evaluate the nominee in accordance with its
charter and the characteristics listed above.
Director Compensation
In March and June 2021, our board of directors approved the
following annual independent director compensation program:
Independent Director Compensation Policy
|
|
|
|
Annual Board Retainers
|
|
|
|
|
Board Member
|
|
$
|
|
20,000
|
|
Chairman of the Board
|
|
$
|
|
10,000
|
|
Annual Committee Chair Retainer
|
|
|
|
|
Audit
|
|
$
|
|
70,000
|
|
Compensation
|
|
$
|
|
20,000
|
|
Nominating and Corporate Governance
|
|
$
|
|
20,000
|
|
Each annual cash retainer is paid quarterly in arrears. There are
currently no equity grants for service on the board of directors.
We do not provide any perquisites to directors but will reimburse
all directors for expenses incurred in physically attending
meetings or performing their duties as directors.
The following Director Compensation Table summarizes the
compensation of each of our non-employee directors for services
rendered to us during the year ended December 31, 2021:
2021 Director Compensation Table
Name
|
|
Fees Earned
or Paid in
Cash ($)
|
|
|
Stock Awards
($)(1)
|
|
|
Option Awards
($)(1)
|
|
|
All Other
Compensation ($)
|
|
|
Total ($)
|
|
Amit Kumar
|
|
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
50,000
|
|
Kim J. Huntley (2)
|
|
|
77,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
77,500
|
|
Will A. Clarke
|
|
|
40,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
40,000
|
|
David Peterson (3)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Victor Lee (3)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
35
|
(2)
|
The
Company increased the annual retainer for the Audit Committee Chair
to $70,000 for the 2021 fiscal year for the additional time burden
relating to SEC filings and remediation efforts for the Company’s
material weakness in financial controls and procedures.
|
|
(3)
|
Non-independent
directors do not receive compensation for their board
service.
|
In addition to the fees listed above, we reimburse the directors
for travel expenses submitted to us related to their attendance at
meetings of the Board or its committees. The directors did not
receive any other compensation or personal benefits.
Code of Ethics
We have adopted a code of ethics that applies to our principal
executive officer, principal financial officer, principal
accounting officer and other senior finance and accounting staff.
The code is designed to, among other things, deter wrongdoing and
to promote the honest and ethical conduct of our officers and
employees. The text of our code of ethics can be found on our
Internet website at www.ascentsolar.com. If we effect an amendment
to, or waiver from, a provision of our code of ethics, we intend to
satisfy our disclosure requirements by posting a description of
such amendment or waiver on that Internet website or via a current
report on Form 8-K.
Communication with the Board of Directors
Stockholders may communicate with the Board by sending
correspondence to our Chairman, c/o the Corporate Secretary, at our
corporate address on the cover of this Form 10-K. It is our
practice to forward all such correspondence to our Chairman, who is
responsible for determining whether to relay the correspondence to
the other members of the Board.
Item 11. Executive Compensation
We have opted to comply with the executive compensation disclosure
rules applicable to “smaller reporting companies,” as such term is
defined in the rules promulgated under the Securities Act.
This section provides an overview of the compensation awarded to,
earned by, or paid to each individual who served as our principal
executive officer during 2021, and up to two of our next most
highly compensated executive officers in respect of their service
to our Company for 2021. Our named executive officers, or the Named
Executive Officers, for the year ended December 31, 2021,
are:
|
•
|
Victor
Lee, our CEO; and
|
|
•
|
Michael
J. Gilbreth, our CFO.
|
The following Summary Compensation Table sets forth certain
information regarding the compensation of our Named Executive
Officers for services rendered in all capacities to us during the
years ended December 31, 2021 and 2020.
36
Summary Compensation Table
Name and Principal Position
|
|
Year
|
|
|
Salary ($)
|
|
|
Bonus ($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
All Other
Comp ($)
|
|
|
Total ($)
|
|
Victor Lee -
Chief Executive
Officer (1)
|
|
|
2021
|
|
|
|
165,000
|
|
|
|
200,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
365,000
|
|
|
|
|
2020
|
|
|
|
96,903
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
96,903
|
|
Michael J. Gilbreth -
Chief Financial
Officer (2)
|
|
|
2021
|
|
|
|
165,000
|
|
|
|
74,250
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
239,250
|
|
|
|
|
2020
|
|
|
|
37,706
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
37,706
|
|
|
(1)
|
Mr.
Lee’s employment agreement provides for a minimum annual salary of
$300,000, which salary was increased to $330,000 in 2016. Due to
liquidity constraints, Mr. Lee agreed to limit his salary for 2020
and 2021 to the amounts shown in the summary compensation table
above. For the 2022 year, Mr. Lee has agreed to an annual salary of
$165,000. In April 2021, the Compensation Committee approved a
special bonus to Mr. Lee of $100,000, and in December 2021, the
Compensation Committee approved an additional bonus to Mr. Lee of
$100,000.
|
|
(2)
|
Mr.
Gilbreth joined the Company on October 5, 2020. In December 2021,
the Compensation Committee approved a bonus to Mr. Gilbreth of
$74,250.
|
Executive Employment Agreements
On April 4, 2014, we entered into an employment agreement with Mr.
Lee. The employment agreement provides that Mr. Lee will receive an
annual base salary of $300,000, subject to annual adjustments as
determined by our board. Mr. Lee will also be eligible for an
annual bonus of up to 100% of his base salary as determined at the
sole discretion of our board or compensation committee. Under this
agreement, if the Company terminates Mr. Lee without cause, then
subject to his execution of a release of claims, (i) Mr. Lee is
entitled to receive twelve months of base salary from the date of
termination, and (ii) the initial stock option grant that Mr. Lee
received upon commencing employment will remain exercisable for a
year following the termination date. The initial stock option grant
is currently fully vested, but Mr. Lee was historically entitled to
an additional year of vesting under such initial stock option grant
upon termination without cause prior to the full vesting of the
option. In addition, the employment agreement provides that Mr. Lee
is eligible to participate in the Company’s standard benefit plans
and programs. Under the employment agreement, Mr. Lee is subject to
a two year non-compete and non-solicit following termination of
employment.
On October 5, 2020, the Company appointed Michael J. Gilbreth to
serve as the Chief Financial Officer of the Company. The Company
hired Mr. Gilbreth pursuant to the terms of a letter agreement and
a standard and customary confidentiality, non-competition, and
no-solicitation agreement. The offer letter provides for at-will
employment with an annual base salary of $165,000, and an annual
bonus opportunity of up to 60% of base salary. An annual minimum
bonus of 25% of base salary is guaranteed, and the additional 35%
is discretionary.
The following table sets forth information concerning the
outstanding equity awards granted to the named executive officer as
of December 31, 2021.
37
Outstanding Equity Awards at Fiscal Year-End
2021
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
Number of Securities
Underlying Unexercised
Options (#)
|
|
|
Option
Exercise
|
|
|
Option
Expiration
|
|
Number of
Shares or
Units of
Stock That
Have Not
|
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
|
|
Name
|
|
Exerciseable
|
|
|
Unexerciseable
|
|
|
Price ($/sh)
|
|
|
Date
|
|
Vested
|
|
|
Vested
|
|
Victor Lee (1)
|
|
|
*
|
|
|
|
-
|
|
|
|
*
|
|
|
3/1/2023
|
|
|
-
|
|
|
|
-
|
|
|
|
|
*
|
|
|
|
-
|
|
|
|
*
|
|
|
4/4/2024
|
|
|
-
|
|
|
|
-
|
|
|
|
|
*
|
|
|
|
-
|
|
|
|
*
|
|
|
2/11/2025
|
|
|
-
|
|
|
|
-
|
|
|
|
|
*
|
|
|
|
-
|
|
|
|
*
|
|
|
6/18/2025
|
|
|
-
|
|
|
|
-
|
|
|
|
|
*
|
|
|
|
-
|
|
|
|
*
|
|
|
3/10/2026
|
|
|
-
|
|
|
|
-
|
|
|
(1)
|
After
giving effect to the January 2022 reverse stock split, each of Mr
Lee’s outstanding stock options (i) is exercisable for fewer than
one share, and (ii) has a per share exercise price in excess of
$6,000,000.
|
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
Securities Authorized for Issuance under Equity Compensation
Plans
None.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows information regarding the beneficial
ownership of our common stock by our directors, executive officers,
former executive officers and greater than 5% beneficial owners as
of March 14, 2022.
Beneficial ownership is determined in accordance with the rules of
the SEC and generally includes any shares over which a person
exercises sole or shared voting or investment power and all shares
issuable upon exercise of options or the vesting of restricted
stock within 60 days of March 14, 2022. For purposes of calculating
the percentage of our common stock beneficially owned, the number
of shares of our common stock includes 30,586,804 shares of our
common stock outstanding as of March 14, 2022.
Unless otherwise indicated, each of the stockholders listed below
has sole voting and investment power with respect to the shares
beneficially owned.
38
The address for each director or
Named
Executive
Officer
is c/o Ascent Solar Technologies, Inc., 12300 Grant Street,
Thornton, Colorado 80241.
Name of Beneficial Owner
|
|
No. of Shares
Beneficially
Owned
|
|
|
Percentage
|
|
5% Stockholders:
|
|
|
|
|
|
|
|
|
Crowdex Investment, LLC (1)
|
|
|
5,545,042
|
|
|
|
18.1
|
%
|
BD 1 Investment Holding, LLC (2)
|
|
|
15,933,334
|
|
|
|
52.1
|
%
|
TubeSolar AG (3)
|
|
|
4,961,234
|
|
|
|
16.2
|
%
|
|
|
|
|
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Named Executive Officers and Directors:
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Victor Lee
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1
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*
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Michael J. Gilbreth
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-
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*
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Amit Kumar, Ph.D.
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1
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*
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Kim J. Huntley
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1
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*
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Will A. Clarke
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-
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*
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David Peterson (4)
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-
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*
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All directors and executive officers as a group
(6 persons)
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3
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*
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(1)
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The
address of Crowdex Investment, LLC ("Crowdex") is 1675 South State
Street, Suite B, Kent County, Delaware 19901. Bernd Förtsch is the
100% direct and indirect beneficial owner of Crowdex.
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(2)
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The
address of BD 1 Investment Holdings, LLC (“BD1”) is 1675 South
State Street, Suite B, Kent County, Delaware 19901. Johannes Kuhn
and Ute Kuhn are the indirect beneficial owners of BD1.
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(3)
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The
address for TubeSolar AG (“TubeSolar”) is Berliner Allee 65, D –
86153 Augsburg, Germany. Bernd Förtsch directly and indirectly owns
a controlling interest in TubeSolar. Mr. Förtsch disclaims
beneficial ownership over any of the securities owned by
TubeSolar.
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(4)
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Mr.
Peterson is the manager of Crowdex. Mr. Peterson disclaims
beneficial ownership of any securities owned by Crowdex.
|
Item 13. Certain Relationships and Related Transactions, and
Director Independence
RELATED PARTY TRANSACTIONS
Relationship with Crowdex and TubeSolar
Crowdex and TubeSolar are both directly and indirectly beneficially
owned and controlled by Bernd Förtsch.
On September 22, 2020, we entered into a securities purchase
agreement (“Series 1A SPA”) with Crowdex for the private placement
of the Company’s newly designated Series 1A Convertible Preferred
Stock (“Series 1A Preferred Stock”). We sold 2,000 shares of Series
1A Preferred Stock to Crowdex in exchange for $2,000,000 of gross
proceeds at an initial closing under the Series 1A SPA on September
22, 2020.
In November 2020, Crowdex converted 1,200 shares of outstanding
Series 1A Preferred Stock into 2,400,000 shares of Common
Stock.
On November 27, 2020, we issued to Crowdex a $500,000 unsecured
convertible promissory note in a private placement and received
$500,000 of gross proceeds from the offering. On December 31, 2020,
we sold 500 shares of Series 1A Preferred Stock to Crowdex in
exchange for the cancellation of the note issued on November 27,
2020. There were no additional cash proceeds from this closing.
39
Crowdex
acquired a $250,000 aggregate principal amount convertible
promissory note of the Company from the original noteholder,
Penumbra Solar, Inc., in September 2020. On December 9,
2021,
Crowdex
converted the note, together with accrued interest, into
545,041 shares of common stock.
On January 4, 2021, the Company entered into a securities purchase
agreement with TubeSolar. Pursuant to this securities purchase
agreement, the Company sold 2,500 shares of Series 1A Preferred
Stock to TubeSolar and received $2,500,000 of gross proceeds on
January 5, 2021. On July 19, 2021, we issued TubeSolar 120,000
shares of common stock upon the conversion by TubeSolar of 60
shares of Series 1A Preferred Stock. On September 3, 2021, we
issued TubeSolar 80,000 shares of common stock upon the conversion
by TubeSolar of 40 shares of Series 1A Preferred Stock.
On September 15, 2021, we entered into the JDA with TubeSolar to
pursue the APV market. We also jointly established the JV. See
“Item 1 Business” for additional detail.
On February 1, 2022:
|
•
|
Crowdex
converted their remaining 1,300 shares of Series 1A Preferred Stock
into 2,600,000 shares of common stock;
|
|
•
|
TubeSolar
converted their remaining 2,400 shares of Series 1A Preferred Stock
into 4,800,000 shares of common stock.
|
Relationship with BD1
On December 18, 2020, the Company entered into a securities
exchange agreement (“BD1 Exchange Agreement”) with BD1. BD1 had
previously acquired all of the Company’s existing outstanding
unsecured notes (other than notes held by Global Ichiban and
Crowdex) from the original note holders. Pursuant to the
terms of the BD1 Exchange Agreement, BD1 agreed to surrender and
exchange all of its outstanding promissory notes with principal
balances of approximately $10.4 million (including accrued interest
and default penalties). In exchange and without the payment of any
additional consideration, the Company issued to BD1 two unsecured
convertible promissory notes with principal amounts of $10,340,000
(the “First Exchange Note”) and $160,000 (the “Second Exchange
Note”). On August 16, 2021, BD1 sold and assigned a portion of the
First Exchange Note equal to $600,000 in principal amount to
Nanyang Investment Management Pte Ltd (“Nanyang”) on behalf of a
client account for a purchase price of $600,000, and on January 21,
2022, further sold and assigned a portion of the First Exchange
Note equal to $1,000,000 in principal amount to Nanyang on behalf
of a client account for a purchase price of $1,000,000. On January
3, 2022, BD1 sold and assigned a portion of the First Exchange Note
equal to $1,000,000 in principal amount to Fleur Capital Pte Ltd
(“Fleur”) on behalf of a client account for a purchase price of
$1,000,000. The Company has issued to BD1 an unsecured convertible
promissory note with principal amount of $7,740,000 replacing the
First Exchange Note (the “Replacement Note” and, together with the
Second Exchange Note, the “BD1 Exchange Notes”).
On August 2, 2021, we entered into a securities purchase agreement
with BD1 for the private placement of an aggregate of 133,334
shares of our common stock at a fixed price of $75 (as adjusted for
the reverse stock split) per share in two tranches of 66,667 shares
in exchange for $10,000,000 of aggregate gross proceeds. On
September 2, 2021, we closed on the first tranche and, on November
5, 2021, we closed on the second tranche, receiving aggregate gross
proceeds of $10,000,000.
On February 1, 2022, BD1 converted its $7,900,000 aggregate
outstanding principal amount of BD1 Exchange Notes into 15,800,000
shares of common stock.
Johannes Kuhn is the indirect beneficial owner of BD1.
Relationship with Global Ichiban
On September 9, 2020, the Company entered into a securities
exchange agreement (“GI Exchange Agreement”) with Global Ichiban
Limited, a British Virgin Islands corporation (“GI”).
Pursuant to the terms of the GI Exchange Agreement, GI agreed to
surrender and exchange all of its existing outstanding promissory
notes with an aggregate principal balance of $6,374,666 (including
accrued interest). In exchange, the Company issued to GI a secured
convertible promissory note with a principal amount of $6,400,000
(“GI Exchange Note”).
40
On March 9, 2021, the Company entered into a settlement agreement
(“Settlement”) with
GI.
Pursuant to the Settlement, the Company issued
33,600
shares of Common Stock
of the Company (“Settlement Shares”) to
GI
in exchange for the cancellation of the
GI Exchange Note, which had an outstanding principal balance
of
$5,800,000.
The GI Exchange Note,
which was originally scheduled to mature on September 30, 2022, had
a variable-rate conversion feature that entitled
GI
to convert into shares of Common Stock of the Company at 80% of the
5-day average closing bid-price prior to any conversion.
Policies and Procedures with Respect to Transactions with Related
Persons
The Board recognizes that related person transactions can present a
heightened risk of potential or actual conflicts of interest.
Accordingly, our Audit Committee charter requires that all such
transactions will be reviewed and subject to approval by members of
our Audit Committee, which will have access, at our expense, to our
or independent legal counsel. Future transactions with our
officers, directors or greater than five percent stockholders will
be on terms no less favorable to us than could be obtained from
independent third parties.
Director Independence
Our Board of Directors has determined that three out of our five
directors are independent directors, as defined under the
applicable rules of the Nasdaq and OTC Markets listing standards.
The independent directors are Messrs. Kumar, Huntley and
Clarke.
Item 14. Principal Accounting Fees and Services
PRINCIPAL ACCOUNTANTS
Fees for audit and related services by our accounting firm, Haynie
& Company, for the years ended December 31, 2021 and 2020
were as follows:
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2021
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2020
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Audit fees
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$
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155,500
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$
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155,500
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Audit related fees
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|
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12,700
|
|
|
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29,236
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Total audit and audit related fees
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|
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168,200
|
|
|
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184,736
|
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Tax fees
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|
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-
|
|
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22,000
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All other fees
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|
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-
|
|
|
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-
|
|
Total Fees
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$
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168,200
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$
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206,736
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|
Audit fees for Haynie & Company for fiscal year 2021 and 2020
represents aggregate fees for the 2021 and 2020 annual audit and
quarterly reviews of the financial statements. Audit-related
services consisted primarily of audit of employee benefit plan and
work performed in connection with our registration
statements.
Audit Committee Pre-Approval Policies and Procedures
The Audit Committee charter provides that the Audit Committee will
pre-approve all audit services and non-audit services to be
provided by our independent auditors before the accountant is
engaged to render these services. The Audit Committee may consult
with management in the decision making process, but may not
delegate this authority to management. The Audit Committee may
delegate its authority to pre-approve services to one or more
committee members, provided that the designees present the
pre-approvals to the full committee at the next committee meeting.
All audit and non-audit services performed by our independent
accountants have been pre-approved by our Audit Committee to assure
that such services do not impair the auditors’ independence from
us.
41
PART IV
Item 15. Exhibits and Financial Statement Schedules
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(a)
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The following documents are filed as part of this Annual Report on
Form 10-K:
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(1)
|
Financial Statements—See Index to
Financial Statements at Item 8 of the Annual Report on Form
10-K.
|
|
(2)
|
Financial Statement
Schedules—Supplemental schedules are not provided because of the
absence of conditions under which they are required or because the
required information is given in the financial statements or notes
thereto.
|
|
(3)
|
Exhibits: See Item 15(b)
below.
|
|
(b)
|
Exhibits: The exhibits listed on the accompanying Index to Exhibits
on this Form 10-K are filed or incorporated into this Form 10-K by
reference.
|
42
INDEX TO
EXHIBITS
Set forth below is a list of exhibits that are being filed or
incorporated by reference into this Annual Report on Form 10-K:
Exhibit No.
|
|
Description
|
|
|
|
3.1
|
|
Amended and Restated
Certificate of Incorporation (incorporated by reference to Exhibit
3.2 to our Registration Statement on Form SB-2 filed on January 23,
2006 (Reg. No. 333-131216))
|
3.2
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|
Certificate of Amendment
to the Amended and Restated Certificate of Incorporation
(incorporated by reference to Exhibit 3.1 to our Quarterly Report
on Form 10-Q for the quarter ended September 30,
2011)
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3.3
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Certificate of Amendment
to the Amended and Restated Certificate of Incorporation
(incorporated by reference to Exhibit 3.1 to our Current Report on
Form 8-K filed February 11, 2014)
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3.4
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|
Certificate of Amendment
to the Amended and Restated Certificate of Incorporation of the
Company, dated August 26, 2014. (incorporated by reference to
Exhibit 3.1 to our Current Report on Form 8-K filed September 2,
2014)
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3.5
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|
Certificate of Amendment
to the Amended and Restated Certificate of Incorporation of the
Company, dated October 27, 2014 (incorporated by reference to
Exhibit 3.1 to our Current Report on Form 8-K dated October 28,
2014)
|
3.6
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|
Certificate of Amendment
to the Amended and Restated Certificate of Incorporation of the
Company, dated December 22, 2014. (incorporated by reference to
Exhibit 3.1 to our Current Report on Form 8-K dated December 23,
2014)
|
3.7
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|
Second Amended and
Restated Bylaws (incorporated by reference to Exhibit 3.2 to our
Current Report on Form 8-K filed on February 17,
2009)
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3.8
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|
First Amendment to Second
Amended and Restated Bylaws (incorporated by reference to Exhibit
3.3 to our Quarterly Report on Form 10-Q for the quarter ended
September 30, 2009)
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3.9
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|
Second Amendment to Second
Amended and Restated Bylaws (incorporated by reference to Exhibit
3.1 to our Current Report on Form 8-K filed January 25,
2013)
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3.10
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|
Third Amendment to Second
Amended and Restated Bylaws (incorporated by reference to Exhibit
3.1 to our Current Report on Form 8-K filed December 18,
2015)
|
3.11
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|
Certificate of Amendment
to the Amended and Restated Certificate of Incorporation of the
Company, dated May 26, 2016 (incorporated by reference to Exhibit
3.1 to our Current Report on Form 8-K filed June 2,
2016)
|
3.12
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|
Certificate of Amendment
to the Amended and Restated Certificate of Incorporation of the
Company, dated September 15, 2016 (incorporated by reference to
Exhibit 3.1 to our Current Report on Form 8-K filed September 16,
2016)
|
3.13
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|
Certificate of Amendment
to the Amended and Restated Certificate of Incorporation of the
Company, dated March 16, 2017 (incorporated by reference to Exhibit
3.1 to our Current Report on Form 8-K filed March 17,
2017)
|
3.14
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|
Certificate of Amendment
to the Amended and Restated Certificate of Incorporation of the
Company, dated July 19, 2018 (incorporated by reference to Exhibit
3.1 to our Current Report on Form 8-K filed July 23,
2018)
|
3.15
|
|
Certificate of Amendment
to the Amended and Restated Certificate of Incorporation of the
Company, dated September 23, 2021 (incorporated by reference to
Exhibit 3.1 to our Current Report on Form 8-K filed September 24,
2021)
|
3.16
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|
Certificate of Amendment
to the Amended and Restated Certificate of Incorporation of the
Company, dated January 27, 2022 (incorporated by reference to
Exhibit 3.1 to our Current Report on Form 8-K filed February 2,
2022)
|
4.1
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|
Form of Common Stock
Certificate (incorporated by reference to Exhibit 4.1 to our
Registration Statement on Form SB-2/A filed on June 6, 2006 (Reg.
No. 333-131216))
|
4.2
|
|
Certificate of
Designations of Series A Preferred Stock (filed as Exhibit 4.2 to
our Registration Statement on Form S-3 filed July 1, 2013 (Reg. No.
333-189739))
|
4.3*
|
|
Description of
Securities
|
10.1
|
|
Securities Purchase
Agreement, dated January 17, 2006, between the Company and ITN
Energy Systems, Inc. (incorporated by reference to Exhibit 10.1 to
our Registration Statement on Form SB-2 filed on January 23, 2006
(Reg. No. 333-131216))CTR
|
10.2
|
|
Invention and Trade Secret
Assignment Agreement, dated January 17, 2006, between the Company
and ITN Energy Systems, Inc. (incorporated by reference to Exhibit
10.2 to our Registration Statement on Form SB-2 filed on January
23, 2006 (Reg. No. 333-131216))CTR
|
43
10.3
|
|
Patent Application
Assignment Agreement, dated January 17, 2006, between the Company
and ITN Energy Systems, Inc. (incorporated by reference to Exhibit
10.3 to our Registration Statement on Form SB-2 filed on
January 23, 2006 (Reg. No. 333-131216))
|
10.4
|
|
License Agreement, dated
January 17, 2006, between the Company and ITN Energy Systems, Inc.
(incorporated by reference to Exhibit 10.4 to our Registration
Statement on Form SB-2 filed on January 23, 2006 (Reg. No.
333-131216))CTR
|
10.5
|
|
Letter Agreement, dated
November 23, 2005, among the Company, ITN Energy Systems, Inc. and
the University of Delaware (incorporated by reference to Exhibit
10.16 to our Registration Statement on Form SB-2/A filed on May 26,
2006 (Reg. No. 333-131216))
|
10.6
|
|
License Agreement, dated
November 21, 2006, between the Company and UD Technology
Corporation (incorporated by reference to Exhibit 10.1 to our
Current Report on Form 8-K filed on November 29,
2006)CTR
|
10.7
|
|
Novation Agreement, dated
January 1, 2007, among the Company, ITN Energy Systems, Inc. and
the United States Government (incorporated by reference to Exhibit
10.23 to our Annual Report on Form 10-KSB for the year ended
December 31, 2006)
|
10.8†
|
|
Executive Employment
Agreement, dated April 4, 2014, between the Company and Victor Lee
(filed as Exhibit 10.1 to our Current Report on Form 8-K filed on
April 9, 2014)
|
10.9†
|
|
Seventh Amended and
Restated 2005 Stock Option Plan (incorporated by reference to Annex
B of our definitive proxy statement dated April 22,
2016)
|
10.10†
|
|
Seventh Amended and
Restated 2008 Restricted Stock Plan Stock Option Plan Plan
(incorporated by reference to Annex A of our definitive proxy
statement dated April 22, 2016)
|
10.11
|
|
Industrial Lease for 12300
Grant Street, Thornton, Colorado dated September 21, 2020
(incorporated by reference to Exhibit 10.50 to our Annual Report on
Form 10-K filed January 29, 2021)
|
10.12
|
|
Long-Term Supply and Joint
Development Agreement dated September 15, 2021 (incorporated by
reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for
the quarter ended September 30, 2021)
|
10.13*
|
|
Fleur Capital Unsecured Convertible
Promissory Note dated January 3, 2022
|
10.14*
|
|
Nanyang Unsecured Convertible
Promissory Note dated January 21, 2022
|
23.1*
|
|
Consent of Haynie &
Company
|
31.1*
|
|
Chief Executive Officer Certification
pursuant to section 302 of the Sarbanes-Oxley Act of
2002
|
31.2*
|
|
Chief Financial Officer Certification
pursuant to section 302 of the Sarbanes-Oxley Act of
2002
|
32.1*
|
|
Chief Executive Officer Certification
pursuant to section 906 of the Sarbanes-Oxley Act of
2002
|
32.2*
|
|
Chief Financial Officer Certification
pursuant to section 906 of the Sarbanes-Oxley Act of
2002
|
101.INS
|
|
Inline XBRL Instance Document – the instance document does not
appear in the Interactive Data File because XBRL tags are embedded
within the Inline XBRL document.
|
101.SCH
|
|
Inline XBRL Taxonomy Extension Schema Document
|
101.CAL
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
104
|
|
Cover Page Interactive Data File (embedded within the Inline XBRL
document)
|
*
|
|
Filed herewith
|
CTR
|
|
Portions of this exhibit have been omitted pursuant to a request
for confidential treatment.
|
†
|
|
Denotes management contract or compensatory plan or
arrangement.
|
Item 16. Form
10-K Summary
None.
44
ASCENT SOLAR TECHNOLOGIES, INC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 14th day of March, 2022.
ASCENT SOLAR TECHNOLOGIES, INC.
|
|
By:
|
|
/S/ VICTOR LEE
|
|
|
|
Lee Kong Hian (aka Victor Lee)
President and Chief Executive Officer
|
|
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant in the capacities and on the dates
indicated.
Signature
|
|
Capacities
|
|
Date
|
/S/ VICTOR LEE
|
|
President & Chief Executive Officer and a Director
(Principal Executive Officer)
|
|
March 14, 2022
|
Lee Kong Hian (aka Victor Lee)
|
|
|
|
|
|
|
Chief Financial Officer
|
|
|
/S/ MICHAEL J. GILBRETH
|
|
(Principal Financial and Accounting Officer)
|
|
March 14, 2022
|
Michael J. Gilbreth
|
|
|
|
|
|
|
|
|
|
/S/ AMIT KUMAR
|
|
Chairman of the Board of Directors
|
|
March 14, 2022
|
Amit Kumar, Ph.D.
|
|
|
|
|
|
|
|
|
|
/S/ WILL A. CLARKE
|
|
Director
|
|
March 14, 2022
|
Will A. Clarke
|
|
|
|