Ascent Solar Technologies, Inc.: Form 10-Q for the period ended Mar 31, 2025

The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and the notes to those financial statements appearing elsewhere in this Form 10-Q and our audited financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024 which was filed with the SEC on March 31, 2025. This discussion and analysis contains statements of a forward-looking nature relating to future events or our future financial performance. As a result of many factors, our actual results may differ materially from those anticipated in these forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should carefully read the “Risk Factors” section of this Quarterly Report and of our Annual Report on Form 10-K for the year ended December 31, 2024 to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Please also see the section entitled “Forward-Looking Statements.”

Overview

We are a solar technology company that manufactures and sells PV solar modules that are flexible, durable, and possess attractive power to weight and power to area performance. Our technology provides renewable power solutions to high-value production and specialty solar markets where traditional rigid solar panels are not suitable, including space power beaming, aerospace, satellites, near earth orbiting vehicles, fixed wing UAV, and agrivoltaics. We operate in these target markets because they have highly specialized needs for power generation and offer attractive pricing due to the significant technological requirements.

We believe the value proposition of Ascent’s proprietary solar technology not only aligns with the needs of customers in our target markets, but also overcomes many of the obstacle’s other solar technologies face in space, aerospace and other markets. Ascent designs and develops finished products for end users in these areas and collaborates with strategic partners to design and develop integrated solutions for products like satellites, spacecraft, airships and UAV. Ascent sees significant overlap in the needs of end users across some of these markets 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 and will fill a void in the satellite market with a lower cost, lighter module and a product that, if struck by an object in space, will create limited space debris.

For the three months ended March 31, 2025, we generated $15,624 of total revenue. As of March 31, 2025, we had an accumulated deficit of $493,283,006.

Due to the high durability enabled by the monolithic integration employed by our technology, the capability to customize modules into different form factors and what we believe is the industry leading light weight and flexibility provided by our modules, we believe that the potential applications for our products are extensive, including integrated solutions anywhere that may need power generation such as power beaming solutions, vehicles in space or in flight or dual-use installations on agricultural land.

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.

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.

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;
• The substantial doubt about our ability to continue as a going concern due to our history of operating losses;
• 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, and distributors, who deal directly with end users in our target markets;
• Our ability to maintain the listing of our common stock on the Nasdaq Capital Market;
• Our ability to maintain effective internal controls over financial reporting;
• 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 accompanying unaudited condensed financial statements have been derived from the accounting records of Ascent Solar Technologies, Inc. as of March 31, 2025 and December 31, 2024, and the results of operations for the three months ended March 31, 2025 and 2024.

Critical Accounting Policies and Estimates

Critical accounting policies used in reporting our financial results are reviewed by management on a regular basis. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Processes used to develop these estimates are evaluated on an ongoing basis. Estimates are based on historical experience and various other assumptions that are believed to be reasonable for making judgments about the carrying value of assets and liabilities. Actual results may differ as outcomes from assumptions may change.

The Company’s significant accounting policies were described in Note 2 to the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. There have been no significant changes to our accounting policies as of March 31, 2025.

Results of Operations

Comparison of the Three Months Ended March 31, 2025 and 2024

Total Revenues. Our total revenues increased by $10,024, or 179%, for the three months ended March 31, 2025 when compared to the same period in 2024. This is primarily due to the Company receiving more purchase orders in 2025 compared to 2024.

Cost of revenue. Cost of revenues is primarily comprised of repair and maintenance, material costs, and direct labor and overhead expenses. Our Cost of revenues increased by $14,727, or 157%, for the three months ended March 31, 2025 when compared to the same period in 2024. This increase is primarily due to the increase in sales.

Research, development and manufacturing operations. Research, development and manufacturing operations costs include costs incurred for product development, pre-production and production activities in our manufacturing facility. Research, development and manufacturing operations costs also include costs related to technology development. Research, development and manufacturing operations costs decreased by $48,489, or 8%, for the three months ended March 31, 2025 when compared to the same period in 2024. This is primarily due to a decrease in preproduction and manufacturing operations cost as the Company continued to focused on product and technology improvements in the current period.

Selling, general and administrative. Selling, general and administrative expenses decreased by $109,270, or 10% for the three months ended March 31, 2025 compared to the same period in 2024. This decrease is primarily due to lower personnel and professional service costs incurred in the current period compared to the prior period.

Share-based compensation. Share-based compensation expense decreased by $47,721 or 18% for the three months ended March 31, 2025 when compared to the same period in 2024. The decrease is due to less RSU awards being expensed for the three months ended March 31, 2025, partially offset by stock option grant expenses.

Other Income/Expense. Other income was $72,134 for the three months ended March 31, 2025, compared to other expense of $62,232 for the same period in 2024, an increase of $134,366. The increase is due primarily to a decrease in interest expense resulting from the conversions and payoff of the December 2022 convertible debt and bridge loans and other income recognized during 2025.

Net Loss. Our Net Loss decreased by $863,446, or 34%, for the three months ended March 31, 2025 compared to the same period in 2024 due primarily to the items mentioned 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 strategy of selling high value PV products and manufacturing at full industrial scale. During the three months ended March 31, 2025 the Company used $1,550,030 in cash for operations.

Additionally, projected total revenues are not anticipated to result in a positive cash flow position for the year overall and, as of March 31, 2025, while the Company has working capital of $567,612, Management believes that additional financing will be required for the Company to reach a level of sufficient sales to achieve profitability.

The Company continues to accelerate sales and marketing efforts related to its 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.

Management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. These 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 Three Months Ended March 31, 2025 and 2024

For the three months ended March 31, 2025, our cash used in operations was $1,550,030 compared to $1,197,861 for the three months ended March 31, 2024, an increase of $352,169. This increase is due primarily to timing of cash outflows. The three months ended March 31, 2025 net cash used in operations of $1,550,030 were primarily funded from 2024 and 2025 financing agreements. In 2024, the Company was raising capital and deferred payments. For the three months ended March 31, 2025, cash used in investing activities was $483 compared to $0 used in investing activities for the three months ended March 31, 2024. For the three months ended March 31, 2025, our cash provided by financing activities was $635,585 compared to $336,602 for the three months ended March 31, 2024, an increase of $298,983. Cash provided by financing activities in 2025 was primarily derived from the ATM agreement partially offset by the bridge loan repayments. During the three months ended March 31, 2024, cash provided by financing activities were primarily attributable to bridge loan proceeds partially offset by the bridge loan repayments.

Off Balance Sheet Transactions

As of March 31, 2025, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

Smaller Reporting Company Status

We are a “smaller reporting company” meaning that the market value of our stock held by non-affiliates is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million. As a smaller reporting company, we may rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and smaller reporting companies have reduced disclosure obligations regarding executive compensation.

Foreign Currency Exchange Risk

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.

We currently do not engage in hedging transactions to reduce our exposure to changes in currency exchange rates, although, we may do so in the future.

We hold no significant funds and have no significant future obligations denominated in foreign currencies as of March 31, 2025.

Interest Rate Risk

Our exposure to market risks for changes in interest rates relates primarily to our cash equivalents and investment portfolio. As of March 31, 2025, our cash equivalents consisted of operating accounts held with financial institutions and investments in money market funds. 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.

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 March 31, 2025. Based on this evaluation, our management concluded the design and operation of our disclosure controls and procedures were effective as of March 31, 2025.

Changes in Internal Control Over Financial Reporting

There were no changes in internal control over financial reporting during the three months ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In addition to the information set forth in this Form 10-Q, you should carefully consider the risk factors disclosed under the heading “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024. Except as set forth below, there have been no material changes to our risk factors from those included in our Annual Report on Form 10-K for the year ended December 31, 2024.

As long as our executive officers, board members and advisory board members, in the aggregate, maintain their current holdings of our equity securities, they will be able to significantly influence all matters requiring stockholder approval.

Upon completion of the Series 1C Preferred Stock funding, executive officers, directors, and advisory board members hold an aggregate of approximately 1,900 shares of Series 1C Preferred Stock. The Series 1C Preferred Stock is entitled to vote along with our common stock on an as-converted to common basis. The shares of Series 1C Preferred Stock owned by such executive officers, directors and advisors (after giving effect to the 4.99% maximum percentage conversion limitations contained in the Series 1C Preferred Stock terms) would be entitled to cast, in the aggregate, approximately 15% votes on any matter to be considered by stockholders for approval at any meeting of stockholders of the Company (or by written consent of stockholders in lieu of meeting), based upon approximately 1,813,775 shares of common stock currently outstanding. These executive officers, directors, and advisors, therefore, will, for the foreseeable future, have significant influence over our management and affairs, and will be able to significantly influence all matters requiring stockholder approval, including the election of directors and significant corporate transactions such as mergers or sales of our Company or assets.