Ascent Solar(ASTI) - 2021 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Unaudited Condensed Consolidated Financial Statements Unaudited Q3 2021 financial statements reveal improved stockholders' deficit and increased cash from financing, despite operating losses Condensed Consolidated Balance Sheets The balance sheet as of September 30, 2021, shows increased cash and assets, reduced liabilities, and an improved stockholders' deficit Condensed Consolidated Balance Sheet Highlights (unaudited) | Account | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $4,281,094 | $167,725 | | Total current assets | $5,090,469 | $779,270 | | Total Assets | $11,443,562 | $7,371,537 | | Liabilities & Stockholders' Deficit | | | | Total current liabilities | $3,335,047 | $9,151,683 | | Total liabilities | $16,061,155 | $27,563,740 | | Total stockholders' deficit | $(4,617,593) | $(20,192,203) | | Total Liabilities and Stockholders' Deficit | $11,443,562 | $7,371,537 | Condensed Consolidated Statements of Operations Q3 and nine-month 2021 operations show net losses, a reversal from 2020 net income, driven by increased operating expenses and reduced other income Condensed Consolidated Statements of Operations (unaudited) | Metric | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $11,723 | $6,293 | $557,369 | $60,445 | | Loss from Operations | $(2,660,427) | $(491,280) | $(5,628,372) | $(1,169,334) | | Net Income/(Loss) | $(2,564,914) | $2,590,621 | $(2,411,469) | $7,625,853 | Condensed Consolidated Statements of Cash Flow Nine-month 2021 cash flow shows increased operating cash burn offset by substantial financing activities, leading to a net increase in cash Cash Flow Summary for the Nine Months Ended September 30 (unaudited) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash (used in) operating activities | $(6,227,813) | $(1,473,988) | | Net cash (used in) provided by investing activities | $(158,818) | $254,444 | | Net cash provided by financing activities | $10,500,000 | $2,298,200 | | Net change in cash and cash equivalents | $4,113,369 | $1,078,656 | Notes to the Unaudited Condensed Consolidated Financial Statements Notes detail focus on high-value PV markets, a key agreement with TubeSolar AG, going concern uncertainty, and significant financing and debt settlement - 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 (UAVs)[25] - On September 15, 2021, the company entered into a Joint Development Agreement (JDA) with TubeSolar AG, which includes up to $4 million in NRE fees, up to $13.5 million in milestone payments, and product revenues. A joint venture in Germany was also established[26][27] - A going concern uncertainty exists due to recurring losses from operations and the need for additional financing to fund requirements for the next twelve months. The company used $6.2 million in cash for operations in the first nine months of 2021[40][41] - On March 9, 2021, the company settled a $5.8 million secured promissory note with Global Ichiban by issuing 168 million shares of common stock, which removed a lien on substantially all of the company's assets[53][54] - On September 4, 2021, the company received notification that its $193,200 PPP loan was forgiven by the SBA[55] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses strategic focus, TubeSolar AG agreement, attributes increased losses to ramping operations, and highlights critical liquidity and going concern doubt Results of Operations Revenues increased in Q3 and nine-month 2021 due to restarted operations, but higher costs and non-recurring derivative gains led to increased operating and net losses Comparison of Three Months Ended September 30 | Metric | 2021 | 2020 | $ Change | | :--- | :--- | :--- | :--- | | Total Revenues | $11,723 | $6,293 | $5,430 | | Cost of Revenue | $687,885 | $5,528 | $(682,357) | | Loss From Operations | $(2,660,427) | $(491,280) | $(2,169,147) | | Net (Loss)/Income | $(2,564,914) | $2,590,621 | $(5,155,535) | Comparison of Nine Months Ended September 30 | Metric | 2021 | 2020 | $ Change | | :--- | :--- | :--- | :--- | | Total Revenues | $557,369 | $60,445 | $496,924 | | Cost of Revenue | $1,184,528 | $101,156 | $(1,083,372) | | Loss From Operations | $(5,628,372) | $(1,169,334) | $(4,459,038) | | Net (Loss)/Income | $(2,411,469) | $7,625,853 | $(10,037,322) | - The increase in revenues, cost of revenues, R&D, and SG&A expenses is attributed to the company ramping up operations in 2021 from a 'dormant status' in 2020[108][111][112] Liquidity and Capital Resources The company's liquidity is critical, with $6.2 million cash used in operations and insufficient cash for the next twelve months, raising substantial doubt about its going concern - The company used $6,227,813 in cash for operations during the nine months ended September 30, 2021[119] - As of September 30, 2021, the company had working capital of $1,755,422, but management states cash liquidity is not sufficient for the next twelve months and requires additional financing[119] - Due to recurring losses and the need for additional financing, there is substantial doubt about the Company's ability to continue as a going concern[121] Quantitative and Qualitative Disclosures About Market Risk The company identifies foreign currency and interest rate risks but believes its limited exposure will not significantly impact financial results or cash flows - The company's primary market risks are identified as foreign currency exchange risk and interest rate risk[126][127] - Management does not believe a change in interest rates will have a significant impact on the company's financial position or results[127] Controls and Procedures Disclosure controls were effective as of September 30, 2021, with a previously identified material weakness in internal control over financial reporting successfully remediated - Management concluded that disclosure controls and procedures were effective as of September 30, 2021[129] - A material weakness related to a lack of technical accounting expertise, disclosed in the 2020 Form 10-K, has been remediated[133][136] - Remediation steps included hiring a new CFO and Controller, reducing the complexity of the debt structure, and engaging an external resource for internal controls documentation and testing[134][135] PART II. OTHER INFORMATION Legal Proceedings The company is not aware of any legal proceedings that would materially adversely affect its business or financial condition - The company is not currently aware of any legal proceedings that would have a material adverse effect on its business[139] Risk Factors The company highlights ongoing COVID-19 business disruption risk and confirms no material changes to previously disclosed risk factors - The COVID-19 pandemic continues to present a risk of business disruption, though the financial impact and duration cannot be reasonably estimated[140] - There have been no material changes to the company's risk factors from those included in the Annual Report on Form 10-K for the year ended December 31, 2020[140] Exhibits This section indexes all exhibits filed with or incorporated into the Form 10-Q, including governance documents, material agreements, and certifications - The report includes an index of exhibits, such as the Certificate of Incorporation, bylaws, material contracts like the Long-Term Supply and Joint Development Agreement, and Sarbanes-Oxley Act certifications[143][144][148]