ASCENT SOLAR TECHNOLOGIES, INC. 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
In
In
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
In
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.
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
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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
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:
• Our ability to generate customer acceptance of and demand for our products;
• Successful ramping up of commercial production on the equipment installed;
• Our products are successfully and timely certified for use in our target
markets;
• Successful operating of production tools to achieve the efficiencies,
throughput and yield necessary to reach our cost targets;
• The products we design are saleable at a price sufficient to generate
profits;
• Our ability to raise sufficient capital to enable us to reach a level of
sales sufficient to achieve profitability on terms favorable to us;
• Effective management of the planned ramp up of our domestic and
international operations;
• 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;
• Our ability to maintain the listing of our common stock on the OTCBB Market;
• Our ability to implement remediation measures to address material weaknesses
in internal control;
• Our ability to achieve projected operational performance and cost metrics;
• Our ability to enter into commercially viable licensing, joint venture, or
other commercial arrangements; and
• Availability of raw materials.
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
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
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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. As of
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. During the years ended
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 Note 13 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 12 for further discussion on the embedded derivatives of each instrument.
Revenue Recognition:
Product revenue. We recognize revenue for module 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, in satisfaction of the corresponding performance obligations.
During the years ended
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.
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 were approximately
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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.
Share-Based Compensation: We measure and recognize compensation expense for all share-based payment awards made to employees, officers, directors, and consultants based on estimated fair values. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service period in our statements of operations included herein. Share-based compensation is based on awards ultimately expected to vest, reduced by estimated forfeitures. Forfeitures are estimated at the time of grant and revised, as necessary, in subsequent periods if actual forfeitures differ from those estimates. For purposes of determining estimated fair value of share-based payment awards on the date of grant, we use the Black-Scholes option-pricing model ("Black-Scholes Model") for option awards. The Black-Scholes Model requires the input of highly subjective assumptions. Because our employee stock options may have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models may not provide a reliable single measure of the fair value of our employee stock options. Management will continue to assess the assumptions and methodologies used to calculate estimated fair value of share-based compensation. Circumstances may change and additional data may become available over time, which result in changes to these assumptions and methodologies, which could materially impact our fair value determination. We estimate the fair value of our restricted stock awards at our stock price on the grant date.
The accounting guidance for share-based compensation may be subject to further interpretation and refinement over time. There are significant differences among option valuation models, and this may result in a lack of comparability with other companies that use different models, methods and assumptions. If factors change and we employ different assumptions in the accounting for share-based compensation in future periods, or if we decide to use a different valuation model, the compensation expense we record in the future may differ significantly from what we have recorded in the current period and could materially affect our loss from operations, net loss and net loss per share.
Use of Estimates: The preparation of financial statements in conformity with
Recently Issued Accounting Standards
In
In
In
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2020, including interim periods within those fiscal years. Management has not yet evaluated the effect that the adoption of ASU 2020-06 will have on the Company's consolidated financial statement presentation or disclosures subsequent to its adoption.
Other new pronouncements issued but not effective as of
Results of Operations
Comparison of the Years Ended
Revenues. Our revenues were
1. Net product revenues were$638,380 for the year endedDecember 31, 2019 compared to$813,512 for the year endedDecember 31, 2018 , a decrease of 22%. The decrease in product sales is the result of our limited operations during the year ended 2019. 2. Revenues generated from government research and development contracts were$48,900 during the year endedDecember 31, 2018 , the Company did not have any revenues attributable to government research and development contracts during the year endedDecember 31, 2019 .
Cost of revenues. Our Cost of revenues for the year ended
Research, development and manufacturing operations. Research, development and
manufacturing operations costs were
Selling, general and administrative. Selling, general and administrative
expenses were
Other Expense, net. Other expense was
Net Loss. Our Net Loss was
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The decrease in Net Loss for the year ended
Decrease (Increase)
to Net Loss For
the Year Ended
December, 2019
Compared to the
Year Ended
December 31, 2018
Revenues (224,032 )
Cost of Revenue 525,041
Research, development and manufacturing operations 1,483,693
Selling, general and administrative expenses 1,397,849
Depreciation and Amortization Expense 134,525
Other Income / Expense
Other income 829,356
Interest Expense (1,498,321 )
Non-Cash Change in Fair Value of Derivatives and
Gain/Loss on Extinguishment of Liabilities, net 8,520,120
Decrease (Increase) to Net Loss 11,168,231
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
Additional projected product revenues are not anticipated to result in a
positive cash flow position for the years 2020 and 2021 overall and, as of
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 has begun activities related to securing additional financing through strategic or financial investors, but there is no assurance the Company will be able to raise additional capital on acceptable terms or at all. If the Company's revenues do not increase rapidly, and/or additional financing is not obtained, the Company will be required to significantly curtail operations to reduce costs and/or sell assets. Such actions would likely have an adverse impact on the Company's future operations.
As a result of the Company's recurring losses from operations, and the need for additional financing to fund its operating and capital requirements, there is uncertainty regarding the Company's ability to maintain liquidity sufficient to operate its business effectively, which raises 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
For the year ended
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Off Balance Sheet Transactions
As of
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