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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

(Mark One)

 

 

 

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2022

or

 

 

 

 

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Transition Period from             to             

Commission File No. 001-32919

 

 

Ascent Solar Technologies, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

 

 

 

Delaware

 

20-3672603

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

12300 Grant Street, Thornton, CO

 

80241

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number including area code: 720-872-5000 

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of exchange on which registered

Common

ASTI

OTC

 

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No    

Indicate by check mark whether the registrant has submitted every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).      Yes      No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

 

 

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of May 12, 2022, there were 30,586,804 shares of our common stock issued and outstanding.

 

 

 


 

 

ASCENT SOLAR TECHNOLOGIES, INC.

Quarterly Report on Form 10-Q

For the Period Ended March 31, 2022

Table of Contents

 

PART I. FINANCIAL INFORMATION

 

Item 1.

Unaudited Condensed Consolidated Financial Statements

1

 

Unaudited Condensed Consolidated Balance Sheets - as of March 31, 2022 and December 31, 2021

1

 

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income - For the Three Months Ended March 31, 2022 and 2021

2

 

Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) - for the Three Months Ended March 31, 2022 and 2021

3

 

Unaudited Condensed Consolidated Statements of Cash Flow - For the Three Months Ended March 31, 2022 and 2021

5

 

Notes to the Unaudited Condensed Consolidated Financial Statements

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

14

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

19

Item 4.

Controls and Procedures

19

PART II. OTHER INFORMATION

21

Item 1.

Legal Proceedings

21

Item 1A.

Risk Factors

21

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

21

Item 3.

Defaults Upon Senior Securities

21

Item 4.

Mine Safety Disclosures

21

Item 5.

Other Information

21

Item 6.

Exhibits

22

SIGNATURES

25

 

 

 

 


Table of Contents

 

 

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes “forward-looking statements” that involve risks and uncertainties. Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future net sales or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, business trends and other information that is not historical information and, in particular, appear under headings including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.” When used in this Quarterly Report, the words “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “forecasts,” “foresees,” “likely,” “may,” “should,” “goal,” “target,” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements are based upon information available to us on the date of this Quarterly Report.

These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of our control, that could cause actual results to differ materially from the results discussed in the forward-looking statements, including, among other things, the matters discussed in this Quarterly Report in the sections captioned “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Factors you should consider that could cause these differences are:

 

The impact of the novel coronavirus (“COVID-19”) pandemic on our business, results of operations, cash flows, financial condition and liquidity;

 

Our operating history and lack of profitability;

 

Our ability to develop demand for, and sales of, our products;

 

Our ability to attract and retain qualified personnel to implement our business plan and corporate growth strategies;

 

Our ability to develop sales, marketing and distribution capabilities;

 

Our ability to successfully develop and maintain strategic relationships with key partners, including OEMs, system integrators, distributors, and e-commerce companies, who deal directly with end users in our target markets;

 

The accuracy of our estimates and projections;

 

Our ability to secure additional financing to fund our short-term and long-term financial needs;

 

Our ability to maintain the listing of our common stock on the OTC Market;

 

The commencement, or outcome, of legal proceedings against us, or by us, including ongoing ligation proceedings;

 

Changes in our business plan or corporate strategies;

 

The extent to which we are able to manage the growth of our operations effectively, both domestically and abroad, whether directly owned or indirectly through licenses;

 

The supply, availability and price of equipment, components and raw materials, including the elements needed to produce our photovoltaic modules;

 

Our ability to expand and protect the intellectual property portfolio that relates to our consumer electronics, photovoltaic modules and processes;

 

Our ability to maintain effective internal controls over financial reporting;

 

Our ability to achieve projected operational performance and cost metrics;

 

General economic and business conditions, and in particular, conditions specific to consumer electronics and the solar power industry; and

 

Other risks and uncertainties discussed in greater detail elsewhere in this Quarterly Report and in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2021.

There may be other factors that could cause our actual results to differ materially from the results referred to in the forward-looking statements. We undertake no obligation to publicly update or revise forward-looking statements to reflect subsequent events or circumstances after the date made, or to reflect the occurrence of unanticipated events, except as required by law.

References to “we,” “us,” “our,” “Ascent,” “Ascent Solar” or the “Company” in this Quarterly Report mean Ascent Solar Technologies, Inc.

 

 


Table of Contents

ASCENT SOLAR TECHNOLOGIES, INC.

 

 

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

3,028,362

 

 

$

5,961,760

 

Trade receivables, net of allowance of $26,000 and $26,000, respectively

 

 

561,254

 

 

 

49,250

 

Inventories, net

 

 

637,620

 

 

 

592,172

 

Prepaid and other current assets

 

 

659,538

 

 

 

247,736

 

Total current assets

 

 

4,886,774

 

 

 

6,850,918

 

 

 

 

 

 

 

 

 

 

Property, Plant and Equipment:

 

 

22,483,386

 

 

 

22,425,935

 

Accumulated depreciation

 

 

(22,158,146

)

 

 

(22,146,273

)

Property, Plant and Equipment, net

 

 

325,240

 

 

 

279,662

 

 

 

 

 

 

 

 

 

 

Other Assets:

 

 

 

 

 

 

 

 

Operating lease right-of-use assets, net

 

 

4,816,017

 

 

 

4,984,688

 

Patents, net of accumulated amortization of $139,842 and $135,050

   respectively

 

 

82,111

 

 

 

86,595

 

Equity method investment

 

 

97,665

 

 

 

21,205

 

Other non-current assets

 

 

625,000

 

 

 

625,000

 

Total Assets

 

$

10,832,807

 

 

$

12,848,068

 

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

600,600

 

 

$

642,165

 

Related party payables

 

 

45,000

 

 

 

45,000

 

Accrued expenses

 

 

1,395,350

 

 

 

991,534

 

Accrued interest

 

 

490,778

 

 

 

475,671

 

Notes payable

 

 

250,000

 

 

 

250,000

 

Current portion of operating lease liability

 

 

665,585

 

 

 

646,742

 

Total current liabilities

 

 

3,447,313

 

 

 

3,051,112

 

Long-Term Liabilities:

 

 

 

 

 

 

 

 

Non-current operating lease liabilities

 

 

4,356,168

 

 

 

4,532,490

 

Non-current convertible notes, net

 

 

946,053

 

 

 

8,076,847

 

Accrued warranty liability

 

 

21,225

 

 

 

21,225

 

Total liabilities

 

 

8,770,759

 

 

 

15,681,674

 

Stockholders’ Equity (Deficit):

 

 

 

 

 

 

 

 

Series A preferred stock, $.0001 par value; 750,000 shares authorized; 48,100

   and 48,100 shares issued and outstanding, respectively ($813,558 and

$801,533 Liquidation Preference, respectively)

 

 

5

 

 

 

5

 

Common stock, $0.0001 par value, 500,000,000 authorized; 30,586,804

   and 4,786,804 shares issued and outstanding, respectively

 

 

3,059

 

 

 

479

 

Additional paid in capital

 

 

434,146,118

 

 

 

424,948,698

 

Accumulated deficit

 

 

(432,080,037

)

 

 

(427,782,788

)

Accumulated other comprehensive loss

 

 

(7,097

)

 

 

-

 

Total stockholders’ equity (deficit)

 

 

2,062,048

 

 

 

(2,833,606

)

Total Liabilities and Stockholders’ Equity (Deficit)

 

$

10,832,807

 

 

$

12,848,068

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1


Table of Contents

ASCENT SOLAR TECHNOLOGIES, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(unaudited)

 

 

Three Months Ended

March 31,

 

 

2022

 

 

 

 

2021

 

Revenues

 

 

 

 

 

 

 

 

 

Products

$

54,210

 

 

 

 

$

165,158

 

Milestone and engineering

 

512,000

 

 

 

 

 

-

 

Total Revenues

 

566,210

 

 

 

 

 

165,158

 

Costs and Expenses

 

 

 

 

 

 

 

 

 

Costs of revenue

 

532,890

 

 

 

 

 

72,782

 

Research, development and manufacturing operations

 

1,406,322

 

 

 

 

 

728,036

 

Selling, general and administrative

 

821,266

 

 

 

 

 

561,709

 

Depreciation and amortization

 

16,665

 

 

 

 

 

12,872

 

Total Costs and Expenses

 

2,777,143

 

 

 

 

 

1,375,399

 

Loss from Operations

 

(2,210,933

)

 

 

 

 

(1,210,241

)

Other Income/(Expense)

 

 

 

 

 

 

 

 

 

Other income/(expense), net

 

-

 

 

 

 

 

800

 

Interest expense

 

(2,086,314

)

 

 

 

 

(562,079

)

Change in fair value of derivatives and

   gain/(loss) on extinguishment of

   liabilities, net

 

-

 

 

 

 

 

3,617,904

 

Total Other Income/(Expense)

 

(2,086,314

)

 

 

 

 

3,056,625

 

Income/(Loss) on Equity Method Investments

 

(2

)

 

 

 

 

-

 

Net Income/(Loss)

$

(4,297,249

)

 

 

 

$

1,846,384

 

Net Income/(Loss) Per Share (Basic)

$

(0.20

)

 

 

 

$

0.51

 

Net Income/(Loss) Per Share (Diluted)

$

(0.20

)

 

 

 

$

0.05

 

Weighted Average Common Shares

   Outstanding (Basic)

 

21,671,248

 

 

 

 

 

3,633,730

 

Weighted Average Common Shares

   Outstanding (Diluted)

 

21,671,248

 

 

 

 

 

32,511,508

 

Other Comprehensive Income/(Loss)

 

 

 

 

 

 

 

 

 

Foreign currency translation gain/(loss)

 

(7,097

)

 

 

 

 

-

 

Net Comprehensive Income/(Loss)

$

(4,304,346

)

 

 

 

$

1,846,384

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

2


Table of Contents

ASCENT SOLAR TECHNOLOGIES, INC.

 

 

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

(unaudited)

For the Three Months Ended March 31, 2022

 

 

 

Series A

Preferred Stock

 

 

Series 1A

Preferred Stock

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

 

 

Other Comprehensive

 

 

Total

Stockholders’

Equity

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

(Deficit)

 

Balance at January 1,

   2022

 

 

48,100

 

 

$

5

 

 

 

3,700

 

 

$

-

 

 

 

4,786,804

 

 

$

479

 

 

$

424,948,698

 

 

$

(427,782,788

)

 

 

 

 

 

$

(2,833,606

)

Conversion of TubeSolar Series 1A

   Preferred Stock into Common

   Stock

 

 

-

 

 

 

-

 

 

 

(2,400

)

 

 

-

 

 

 

4,800,000

 

 

 

480

 

 

 

(480

)

 

 

-

 

 

 

-

 

 

 

-

 

Conversion of Crowdex Series 1A

   Preferred Stock into Common

   Stock

 

 

-

 

 

 

-

 

 

 

(1,300

)

 

 

-

 

 

 

2,600,000

 

 

 

260

 

 

 

(260

)

 

 

-

 

 

 

-

 

 

 

-

 

Conversion of BD1 Note

   into Common Stock

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

15,800,000

 

 

 

1,580

 

 

 

7,898,420

 

 

 

-

 

 

 

-

 

 

 

7,900,000

 

Conversion of Nanyang Note

   into Common Stock

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,200,000

 

 

 

120

 

 

 

599,880

 

 

 

-

 

 

 

-

 

 

 

600,000

 

Conversion of Fleur Note into

   Common Stock

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,400,000

 

 

 

140

 

 

 

699,860

 

 

 

-

 

 

 

-

 

 

 

700,000

 

Net Income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(4,297,249

)

 

 

-

 

 

 

(4,297,249

)

Foreign currency translation

   gain/(loss)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(7,097

)

 

 

(7,097

)

Balance at March 31,

   2022

 

 

48,100

 

 

$

5

 

 

 

-

 

 

$

-

 

 

 

30,586,804

 

 

$

3,059

 

 

$

434,146,118

 

 

$

(432,080,037

)

 

$

(7,097

)

 

$

2,062,048

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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ASCENT SOLAR TECHNOLOGIES, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(unaudited)

For the Three Months Ended March 31, 2021

 

 

 

Series A

Preferred Stock

 

 

Series 1A

Preferred Stock

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

 

 

Total

Stockholders’

Equity

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

(Deficit)

 

Balance at January 1,

   2021

 

 

48,100

 

 

$

5

 

 

 

1,300

 

 

$

-

 

 

 

3,659,828

 

 

$

366

 

 

$

401,590,211

 

 

$

(421,782,785

)

 

$

(20,192,203

)

Proceeds from issuance of

   Series 1A Preferred

   Stock

 

 

-

 

 

 

-

 

 

 

2,500

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,500,000

 

 

 

-

 

 

 

2,500,000

 

Proceeds from issuance of

   Common Stock

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,500

 

 

 

2

 

 

 

2,999,998

 

 

 

-

 

 

 

3,000,000

 

Conversion of Global

   Ichiban Note into

   Common Shares

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

33,600

 

 

 

3

 

 

 

5,799,997

 

 

 

-

 

 

 

5,800,000

 

Relieved on Conversion of

   Derivative Liability

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,686,079

 

 

 

-

 

 

 

1,686,079

 

Net Income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,846,384

 

 

 

1,846,384

 

Balance at March 31,

   2021

 

 

48,100

 

 

$

5

 

 

 

3,800

 

 

$

-

 

 

 

3,694,928

 

 

$

371

 

 

$

414,576,285

 

 

$

(419,936,401

)

 

$

(5,359,740

)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

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ASCENT SOLAR TECHNOLOGIES, INC.

 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

 

 

For the Three Months Ended

 

 

 

March 31,

 

 

 

2022

 

 

2021

 

Operating Activities:

 

 

 

 

 

 

 

 

Net income/(loss)

 

$

(4,297,249

)

 

$

1,846,384

 

Adjustments to reconcile net income (loss) to cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

16,665

 

 

 

12,874

 

Operating lease asset amortization

 

 

168,671

 

 

 

158,502

 

Amortization of debt discount

 

 

2,069,206

 

 

 

542,164

 

Loss on equity method investment

 

 

2

 

 

 

 

Warranty reserve

 

 

 

 

 

(463

)

Gain on extinguishment of liabilities, net

 

 

 

 

 

(3,617,904

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(512,004

)

 

 

(12,100

)

Inventories

 

 

(45,448

)

 

 

(130,369

)

Prepaid expenses and other current assets

 

 

(411,802

)

 

 

(161,592

)

Accounts payable

 

 

(41,565

)

 

 

(96,691

)

Related party payable

 

 

 

 

 

(103,334

)

Operating lease liabilities

 

 

(157,479

)

 

 

(140,105

)

Accrued interest

 

 

15,107

 

 

 

5,413

 

Accrued expenses

 

 

403,816

 

 

 

(312,073

)

Net cash used in operating activities

 

 

(2,792,080

)

 

 

(2,009,294

)

Investing Activities:

 

 

 

 

 

 

 

 

Contributions to equity method investment

 

 

(83,559

)

 

 

 

Payments on purchase of assets

 

 

(57,451

)

 

 

 

Patent activity costs

 

 

(308

)

 

 

 

Net cash used in investing activities

 

 

(141,318

)

 

 

 

Financing Activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of stock

 

 

 

 

 

5,500,000

 

Net cash provided by financing activities

 

 

 

 

 

5,500,000

 

Net change in cash and cash equivalents

 

 

(2,933,398

)

 

 

3,490,706

 

Cash and cash equivalents at beginning of period

 

 

5,961,760

 

 

 

167,725

 

Cash and cash equivalents at end of period

 

$

3,028,362

 

 

$

3,658,431

 

Non-Cash Transactions:

 

 

 

 

 

 

 

 

Non-cash conversions of preferred stock and convertible notes to equity

 

$

9,200,000

 

 

$

5,800,000

 

Series 1A preferred stock conversion

 

$

740

 

 

$

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. ORGANIZATION

Ascent Solar Technologies, Inc. and its wholly owned subsidiary, Ascent Solar (Asia) Pte. Ltd. (collectively, the “Company") is focusing on integrating its PV products into high value markets such as aerospace, satellites, near earth orbiting vehicles, and fixed wing unmanned aerial vehicles (“UAV”). The value proposition of Ascent’s proprietary solar technology not only aligns with the needs of customers in these industries, but also overcomes many of the obstacles other solar technologies face in these unique markets. Ascent has the capability to design and develop finished products for end users in these areas as well as collaborate with strategic partners to design and develop custom integrated solutions for products like fixed-wing UAVs. Ascent sees significant overlap of the needs of end users across some of these industries and can achieve economies of scale in sourcing, development, and production in commercializing products for these customers.

On January 28, 2022 as of 5:00 pm Eastern Time, the Company effected a reverse stock split of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) at a ratio of one-for-five thousand (the “Reverse Stock Split”). The Company’s common stock began trading on a split-adjusted basis at 9:30 am Eastern Time on January 31, 2022. Stockholders also received one whole share of Common Stock in lieu of a fractional share and no fractional shares were issued. All shares and per share amounts in the condensed consolidated financial statements and accompanying notes have been retroactively adjusted to give effect to the Reverse Stock Split.

 

Following the Reverse Stock Split, the Company’s issued and outstanding shares of Common Stock were decreased from approximately 23.7 billion pre-split shares to 4.8 million post-split shares. In connection with the Reverse Stock Split effectiveness, the number of authorized shares of the Company's Common Stock were decreased from 30 billion to 500 million shares.

NOTE 2. BASIS OF PRESENTATION

The accompanying, unaudited, condensed consolidated financial statements have been derived from the accounting records of the Company as of March 31, 2022 and December 31, 2021, and the results of operations for the three months ended March 31, 2022 and 2021. All significant inter-company balances and transactions have been eliminated in the accompanying condensed consolidated financial statements.

The accompanying, unaudited, condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, these interim financial statements do not include all of the information and footnotes typically found in U.S. GAAP audited annual financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement have been included. The Condensed Consolidated Balance Sheet at December 31, 2021 has been derived from the audited financial statements as of that date but does not include all of the information and footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. These condensed consolidated financial statements and notes should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company’s significant accounting policies were described in Note 3 to the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. There have been no significant changes to our accounting policies as of March 31, 2022.

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Revenue Recognition:

Product revenue. The Company recognizes revenue for the sale of PV modules and other equipment sales at a point in time following the transfer of control of such products to the customer, which typically occurs upon shipment or delivery depending on the terms of the underlying contracts. For module and other equipment sales contracts that contain multiple performance obligations, the Company allocates the transaction price to each performance obligation identified in the contract based on relative standalone selling prices, or estimates of such prices, and recognizes the related revenue as control of each individual product is transferred to the customer.

During the three months ended March 31, 2022 and 2021, the Company recognized product revenue of $54,210 and $165,158, respectively.

Milestone and engineering revenue. Each milestone and engineering arrangement is a separate performance obligation. The transaction price is estimated using the most likely amount method and revenue is recognized as the performance obligation is satisfied through achieving manufacturing, cost, or engineering targets. During the three months ended March 31, 2022, the Company recognized Milestone and engineering revenue of $512,000 from TubeSolar AG (“TubeSolar”), a significant existing stakeholder in the Company and a related party. The Company did not have Milestone and engineering revenue during the three months ended March 31, 2021.

Government contracts revenue. Revenue from government research and development contracts is generated under terms that are cost plus fee or firm fixed price. The Company generally recognizes this revenue over time using cost-based input methods, which recognizes revenue and gross profit as work is performed based on the relationship between actual costs incurred compared to the total estimated costs of the contract. In applying cost-based input methods of revenue recognition, the Company uses the actual costs incurred relative to the total estimated costs to determine our progress towards contract completion and to calculate the corresponding amount of revenue to recognize.

Cost based input methods of revenue recognition are considered a faithful depiction of the Company’s efforts to satisfy long-term government research and development contracts and therefore reflect the performance obligations under such contracts. Costs incurred that do not contribute to satisfying the Company’s performance obligations are excluded from the input methods of revenue recognition as the amounts are not reflective of transferring control under the contract. Costs incurred towards contract completion may include direct costs plus allowable indirect costs and an allocable portion of the fixed fee. If actual and estimated costs to complete a contract indicate a loss, provision is made currently for the loss anticipated on the contract.

No government contract revenue was recognized during the three months ended March 31, 2022 and 2021.

As of March 31, 2022 and December 31, 2021, the Company had an accounts receivable, net balance of $561,254 and $49,250, respectively. As of March 31, 2022 and December 31, 2021, the Company had an allowance for doubtful accounts of $26,000 and $26,000, respectively.

Deferred revenue was as follows:    

 

Balance as of January 1, 2022

$

22,500

 

Additions

 

198,500

 

Recognized as revenue

 

(22,500

)

Balance as of March 31, 2022

$

198,500

 

Earnings per Share: Earnings per share (“EPS”) are the amount of earnings attributable to each share of common stock. Basic EPS has been computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding during the period. Income available to common stockholders has been computed by deducting dividends accumulated for the period on cumulative preferred stock (whether or not earned) from net income. Diluted earnings per share has been computed by dividing net income adjusted on an if-converted basis for the period by the weighted average number of common shares and potentially dilutive common share outstanding (which consist of options and convertible securities using the treasury stock method or the if-converted method, as applicable, to the extent they are dilutive). Approximately 2.4 million shares of dilutive shares were excluded from the three months period ended March 31, 2022 EPS calculation as their impact is antidilutive. There were approximately 32.5 million shares of dilutive shares for the three months period ended March 31, 2021.  

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Recently Adopted or to be Adopted Accounting Policies

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 U.S. 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 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 condensed consolidated financial statement presentation or disclosures.

Other new pronouncements issued but not effective as of March 31, 2022 are not expected to have a material impact on the Company’s condensed consolidated financial statements.

NOTE 4. LIQUIDITY, CONTINUED OPERATIONS, AND GOING CONCERN    

During the year ended December 31, 2021, the Company entered into multiple financing agreements to fund operations. Further discussion of these transactions can be found in Notes 8, 9, 10, and 11 in the Company's Annual Report on Form 10-K for the year ended December 31, 2021.

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 three months ended March 31, 2022 the Company used $2,792,080 in cash for operations.

Additional projected product revenues are not anticipated to result in a positive cash flow position for the next twelve months overall and, as of March 31, 2022, the Company has working capital of $1,439,461. As such, cash liquidity is not sufficient for the next twelve months and will require additional financing.

The Company continues to accelerate sales and marketing efforts related to its consumer and military solar products and specialty PV application strategies through expansion of its sales and distribution channels. The Company continues activities related to securing additional financing through strategic or financial investors, but there is no assurance the Company will be able to raise additional capital on acceptable terms or at all. If the Company's revenues do not increase rapidly, and/or additional financing is not obtained, the Company will be required to significantly curtail operations to reduce costs and/or sell assets. Such actions would likely have an adverse impact on the Company's future operations.

As a result of the Company’s recurring losses from operations and the need for additional financing to fund its operating and capital requirements, there is uncertainty regarding the Company’s ability to maintain liquidity sufficient to operate its business effectively, which raises doubt as to the Company’s ability to continue as a going concern.

Management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. These condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

NOTE 5. RELATED PARTY TRANSACTIONS

On September 15, 2021, the Company entered into a Long-Term Supply and Joint Development Agreement (“JDA”) with TubeSolar AG (“TubeSolar”). Under the terms of the JDA, the Company will produce, and TubeSolar will purchase, thin-film photovoltaic (“PV”) foils (“PV Foils”) for use in TubeSolar’s solar modules for agricultural photovoltaic (“APV”) applications that require solar foils for its production. Additionally, the Company will receive up (i) to $4 million of non-recurring engineering (“NRE”) fees, and (ii) up to $13.5 million of payments upon achievement of certain agreed production and cost

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structure milestones. The JDA has no fixed term, and may only be terminated by either party for breach. $500,000 of NRE revenue was recognized under the JDA during the three months ended March 31, 2022.

The Company and TubeSolar have also jointly established Ascent Solar Technologies Germany GmbH (“Ascent Germany”), in which TubeSolar holds of 30% of the entity. The purpose of Ascent Germany is to establish and operate a PV manufacturing facility in Germany that will produce and deliver PV Foils exclusively to TubeSolar. Until Ascent Germany’s facility is fully operational, PV Foils will be manufactured in the Company’s existing facility in Thornton, Colorado. The parties expect to jointly develop next generation tooling for use in manufacturing PV Foils at the JV facility. The Company accounts for this investment as an equity method investment as it does not have control of this entity, but does have significant influence over the activities that most significantly impacts the entity’s operations and financial performance. The Company contributed $83,559 to Ascent Germany during the three months ended March 31, 2022. The Company currently cannot quantify its maximum exposure in this entity.

NOTE 6. PROPERTY, PLANT AND EQUIPMENT

The following table summarizes property, plant and equipment as of March 31, 2022 and December 31, 2021:

 

 

 

As of

March 31,

 

 

As of

December 31,

 

 

 

2022

 

 

2021

 

Furniture, fixtures, computer hardware and

   computer software

 

$

494,897

 

 

$

473,448

 

Manufacturing machinery and equipment

 

 

21,867,097

 

 

 

21,863,624

 

Manufacturing machinery and equipment,

   in progress

 

 

121,392

 

 

 

88,863

 

Depreciable property, plant and equipment

 

 

22,483,386

 

 

 

22,425,935

 

Less: Accumulated depreciation and amortization

 

 

(22,158,146

)

 

 

(22,146,273

)

Net property, plant and equipment

 

$

325,240

 

 

$

279,662

 

 

Depreciation expense for the three months ended March 31, 2022 and 2021 was $11,873 and $2,724, respectively.   Depreciation expense is recorded under “Depreciation and amortization expense” in the unaudited Condensed Consolidated Statements of Operations.

NOTE 7. OPERATING LEASE

The Company leases approximately 100,000 rentable square feet for its manufacturing and operations. The lease is classified as an operating lease and accounted for accordingly. The Lease term is for 88 months commencing on September 21, 2020 at a rent of $50,000 per month including taxes, insurance and common area maintenance until December 31, 2020. Beginning January 1, 2021, the rent adjusted to $80,000 per month on a triple net basis and shall increase at an annual rate of 3% per annum until December 31, 2027.

As of March 31, 2022 and December 31, 2021, assets and liabilities related to the Company’s lease were as follows:

 

 

 

As of

March 31,

 

 

As of

December 31,

 

 

 

2022

 

 

2021

 

Operating lease right-of-use assets, net

 

$

4,816,017

 

 

$

4,984,688

 

Current portion of operating lease liability

 

 

665,585

 

 

 

646,742

 

Non-current portion of operating lease liability

 

 

4,356,168

 

 

 

4,532,490

 

During the three months ended March 31, 2022 and 2021 the Company recorded operating lease costs included in rent expense of $258,392 and $258,393, respectively.

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Future maturities of the operating lease liability are as follows:

 

Remainder of 2022

 

$

741,600

 

2023

 

 

1,018,464

 

2024

 

 

1,049,018

 

2025

 

 

1,080,488

 

2026

 

 

1,112,903

 

Thereafter

 

 

1,146,290

 

Total lease payments

 

 

6,148,763

 

Less amounts representing interest

 

 

(1,127,010

)

Present value of lease liability

 

$

5,021,753

 

 

The remaining lease term and discount rate of the operating lease is 69.5 months and 7.0%, respectively.

 

NOTE 8. INVENTORIES

Inventories, net of reserves, consisted of the following at March 31, 2022 and December 31, 2021:

 

 

 

As of

March 31,

 

 

As of

December 31,

 

 

 

2022

 

 

2021

 

Raw materials

 

$

592,300

 

 

$

575,154

 

Work in process

 

 

41,619

 

 

 

15,803

 

Finished goods

 

 

3,700

 

 

 

1,215

 

Total

 

$

637,620

 

 

$

592,172

 

 

NOTE 9. NOTES PAYABLE

On June 30, 2017, the Company entered into an agreement with a vendor (“Vendor”) to convert the balance of their account into a note payable in the amount of $250,000. The note bears interest of 5% per annum and matured on February 28, 2018. As of March 31, 2022, the Company had not made any payments on this note, the accrued interest was $59,418, and the note is due upon demand. To the best of our knowledge, Vendor has not made any attempts to recover any amount owing to them since 2019.

 

NOTE 10. CONVERTIBLE NOTES

The following table provides a summary of the activity of the Company's unsecured, convertible, promissory notes:

 

 

Principal

Balance

1/1/2022

 

New

Notes

 

Notes assigned or exchanged

 

Notes

converted

 

Principal

Balance

3/31/2022

 

Less:

Discount

Balance

 

Net

Principal

Balance

3/31/2022

 

BD1 Notes

  (related party)

$

9,900,000

 

$

 

$

(2,000,000

)

$

(7,900,000

)

$

 

$

 

$

 

Nanyang Note

 

500,000

 

 

 

 

1,000,000

 

 

(600,000

)

 

900,000

 

 

(190,442

)

 

709,558

 

Fleur Note

 

 

 

 

 

1,000,000

 

 

(700,000

)

 

300,000

 

 

(63,505

)

 

236,495

 

 

$

10,400,000

 

$

 

$

 

$

(9,200,000

)

$

1,200,000

 

$

(253,947

)

$

946,053

 

 

BD1 Convertible Note

On January 3, 2022, BD 1 Investment Holding, LLC (“BD1”) sold and assigned $1,000,000 of its convertible notes (“BD1 Convertible Notes”) to Fleur Capital Pte Ltd (“Fleur”). On January 21, 2022, BD1 sold and assigned $1,000,000 of its convertible notes to Nanyang Investment Management Pte Ltd (“Nanyang”). The aggregate remaining principal balance held by BD1 after these assignments was $7,900,000. On February 1, 2022, BD1 converted its $7,900,000 aggregate outstanding

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principal amount into 15,800,000 shares of common stock. The remaining discount of approximately $1,721,000 was charged to interest expense upon conversion.  

Nanyang Convertible Note

On January 21, 2022, as discussed above, BD1 assigned $1,000,000 of the BD1 Convertible Notes to Nanyang. This note does not bear any interest and will mature on December 18, 2025. Nanyang has the right, at any time until the note is fully paid, to convert any outstanding and unpaid principal into share of common stock at a fixed conversion price equal to $0.50 per share. Shares of common stock may not be issued pursuant to this note if, after giving effect to the conversion or issuance, Nanyang, together with its affiliates, would beneficially own in excess of 4.99% of the outstanding shares of the Company’s common stock.  

On February 2, 2022, Nanyang converted $600,000 of their convertible notes into 1,200,000 shares of common stock. The associated discount on the converted portion of the notes of approximately $133,000 was charged to interest expense. The discount on the remaining principal will be charged to interest expense, ratably, over the life of the note.

Fleur Convertible Note

On January 21, 2022, as discussed above, BD1 assigned $1,000,000 of the BD1 Convertible Notes to Fleur. This note does not bear any interest and will mature on December 18, 2025. Fleur has the right, at any time until the note is fully paid, to convert any outstanding and unpaid principal into share of common stock at a fixed conversion price equal to $0.50 per share. Shares of common stock may not be issued pursuant to this note if, after giving effect to the conversion or issuance, Fleur, together with its affiliates, would beneficially own in excess of 4.99% of the outstanding shares of the Company’s common stock.  

On February 2, 2022, Fleur converted $700,000 of their convertible notes into 1,400,000 shares of common stock. The associated discount on the converted portion of the notes of approximately $155,000 was charged to interest expense. The discount on the remaining principal will be charged to interest expense, ratably, over the life of the note.

NOTE 11. SERIES A PREFERRED STOCK

As of January 1, 2022, there were 48,100 shares of Series A Preferred Stock outstanding. Holders of Series A Preferred Stock are entitled to cumulative dividends at a rate of 8% per annum when and if declared by the Board of Directors in its sole discretion. The dividends may be paid in cash or in the form of common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period), at the discretion of the Board of Directors. The dividend rate on the Series A Preferred Stock is indexed to the Company's stock price and subject to adjustment. In addition, the Series A Preferred Stock contains a make-whole provision whereby, conversion or redemption of the preferred stock within 4 years of issuance will require dividends for the full four year period to be paid by the Company in cash or common stock (valued at 10% below market price, but not to exceed the lowest closing price during the applicable measurement period). This make-whole provision expired in June 2017.

The Series A Preferred Stock may be converted into shares of common stock at the option of the Company if the closing price of the common stock exceeds $1,160,000, as adjusted, for twenty consecutive trading days, or by the holder at any time. The Company has the right to redeem the Series A Preferred Stock at a price of $8.00 per share, plus any accrued and unpaid dividends, plus the make-whole amount (if applicable). At March 31, 2022, the preferred shares were not eligible for conversion to common shares at the option of the Company. The holder of the preferred shares may convert to common shares at any time. After making adjustment for the Company’s prior reverse stock splits, all 48,100 outstanding Series A preferred shares are convertible into less than one common share. Upon any conversion (whether at the option of the Company or the holder), the holder is entitled to receive any accrued but unpaid dividends.

Except as otherwise required by law (or with respect to approval of certain actions), the Series A Preferred Stock shall have no voting rights. Upon any liquidation, dissolution or winding up of the Company, after payment or provision for payment of debts and other liabilities of the Company, the holders of Series A Preferred Stock shall be entitled to receive, pari passu with any distribution to the holders of common stock of the Company, an amount equal to $8.00 per share of Series A Preferred Stock plus any accrued and unpaid dividends.

As of March 31, 2022, there were 48,100 shares of Series A Preferred Stock outstanding and accrued and unpaid dividends of $428,758.

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NOTE 12. SERIES 1A PREFERRED STOCK

Series 1A Preferred Stock – Tranche 1 Closing

As of January 1, 2022, there were 3,700 shares of Series 1A Preferred Stock outstanding; 1,300 shares owned by Crowdex Investment, LLC (“Crowdex”) and 2,400 shares owned by TubeSolar. Each share of Series 1A Preferred Stock has an original issue price of $1,000 per share. Shares of the Series 1A Preferred Stock are convertible into common stock at a fixed conversion price equal to $0.50 per common share, subject to standard ratable anti-dilution adjustments.

Outstanding shares of Series 1A Preferred Stock are entitled to vote together with the holders of common stock as a single class (on an as-converted to common stock basis) on any matter presented to the stockholders of the Company for their action or consideration at any meeting of stock holders (or written consent of stockholders in lieu of meeting).

Holders of the Series 1A Preferred Stock are not entitled to any fixed rate of dividends. If the Company pays a dividend or otherwise makes a distribution payable on shares of common stock, holders of the Series 1A Preferred Stock will receive such dividend or distribution on an as-converted to common stock basis. There are no specified redemption rights for the Series 1A Preferred Stock. Upon liquidation, dissolution or winding up, holders of Series 1A Preferred Stock will be entitled to be paid out of our assets, prior to the holders of our common stock, an amount equal to $1,000 per share plus any accrued but unpaid dividends (if any) thereon.

On February 1, 2022 Crowdex and TubesSolar converted their remaining shares 1,300 and 2,400, respectively, of Series 1A Preferred Stock into 2,600,000 and 4,800,000, respectively shares of common stock.

 

NOTE 13. STOCKHOLDERS’ EQUITY (DEFICIT)

Common Stock

At March 31, 2022, the Company had 500 million shares of common stock, $0.0001 par value, authorized for issuance. Each share of common stock has the right to one vote. As of March 31, 2022, the Company had 30,586,804 shares of common stock outstanding. The Company has not declared or paid any dividends related to the common stock through March 31, 2022.

Preferred Stock

At March 31, 2022, the Company had 25 million shares of preferred stock, $0.0001 par value, authorized for issuance. Preferred stock may be issued in classes or series. Designations, powers, preferences, rights, qualifications, limitations and restrictions are determined by the Company’s Board of Directors. 

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The following table summarizes the designations, shares authorized, and shares outstanding for the Company's Preferred Stock:

 

Preferred Stock Series Designation

 

Shares

Authorized

 

 

Shares

Outstanding

 

Series A

 

 

750,000

 

 

 

48,100

 

Series 1A

 

 

5,000

 

 

 

 

Series B-1

 

 

2,000

 

 

 

 

Series B-2

 

 

1,000

 

 

 

 

Series C

 

 

1,000