Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________________________ 
FORM 10-Q
 ______________________________________________________
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2011
or
o
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  
_________________________________________________________
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   x     No   o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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).     x   Yes     o   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
 
o
  
Accelerated filer
 
o
 
 
 
 
Non-accelerated filer
 
o   (Do not check if a smaller reporting company)
  
Smaller reporting company
 
x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   o     No   x
As of October 20, 2011 , there were 38,953,948 shares of our common stock issued and outstanding.
Table of Contents

ASCENT SOLAR TECHNOLOGIES, INC.
Quarterly Report on Form 10-Q
Quarterly Period Ended September 30, 2011
Table of Contents
 
 
 
 
 
Item 1.
 
 
 
 
 
Item 2.
Item 3.
Item 4.
 
Item 1.
Item 1A.
Item 6.

2
Table of Contents

PART I. FINANCIAL INFORMATION
 
Item 1. Condensed Financial Statements

ASCENT SOLAR TECHNOLOGIES, INC.
(A Development Stage Company)
CONDENSED BALANCE SHEETS
(Unaudited)
 
 
 
September 30,
2011
 
December 31,
2010
ASSETS
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
 
$
9,867,496

 
$
27,303,217

Investments
 
17,229,026

 
17,486,409

Trade receivables
 
430,555

 
485,026

Related party receivables
 
—

 
2,524

Inventories
 
3,122,130

 
1,876,834

Prepaid expenses and other current assets
 
444,968

 
510,348

Total current assets
 
31,094,175

 
47,664,358

Property, Plant and Equipment:
 
36,699,565

 
110,709,320

Less accumulated depreciation and amortization
 
(6,575,513
)
 
(10,706,478
)
 
 
30,124,052

 
100,002,842

Other Assets:
 
 
 
 
Restricted cash
 
1,472,697

 
3,259,350

Deposits on manufacturing equipment
 
3,377,937

 
8,770,693

Patents, net of amortization of $23,539 and $17,186, respectively
 
316,398

 
259,439

Other non-current assets
 
61,250

 
64,062

 
 
5,228,282

 
12,353,544

Total Assets
 
$
66,446,509

 
$
160,020,744

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
Current Liabilities:
 
 
 
 
Accounts payable
 
$
279,014

 
$
1,092,449

Related party payables
 
—

 
54,037

Accrued expenses
 
2,401,547

 
1,810,851

Accrued property, plant and equipment
 
1,455,907

 
2,385,301

Deferred revenue
 
—

 
250,705

Current portion of long-term debt
 
644,010

 
232,257

Current portion of long-term debt – related party
 
—

 
350,000

Total current liabilities
 
4,780,478

 
6,175,600

Long-Term Debt
 
6,678,624

 
6,863,129

Long-Term Debt - Related Party
 
—

 
400,000

Accrued Warranty Liability
 
24,873

 
15,900

Commitments and Contingencies (Notes 4, 12 & 18)
 

 

Stockholders’ Equity:
 
 
 
 
Preferred stock, $0.0001 par value, 25,000,000 shares authorized, no shares outstanding
 
—

 
—

Common stock, $0.0001 par value, 75,000,000 shares authorized; 38,933,607 and 32,265,587 shares issued and outstanding at September 30, 2011 and December 31, 2010, respectively
 
3,893

 
3,226

Additional paid in capital
 
232,405,717

 
223,826,191

Deficit accumulated during the development stage
 
(177,449,976
)
 
(77,263,076
)
Accumulated other comprehensive income (loss)
 
2,900

 
(226
)
Total stockholders’ equity
 
54,962,534

 
146,566,115

Total Liabilities and Stockholders’ Equity
 
$
66,446,509

 
$
160,020,744

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

3
Table of Contents


ASCENT SOLAR TECHNOLOGIES, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
 
 
 
For the Three Months Ended
 
For the Nine Months Ended
 
For the Period from Inception (October 18, 2005) Through September 30, 2011
 
 
September 30,
 
September 30,
 
 
 
2011
 
2010
 
2011
 
2010
 
Revenues
 
$
988,507

 
$
623,340

 
$
3,199,145

 
$
1,285,550

 
$
9,647,383

Costs and Expenses
 
 
 
 
 
 
 
 
 
 
Research and development
 
4,144,608

 
6,418,402

 
19,440,379

 
16,904,741

 
75,004,297

Selling, general and administrative
 
1,524,191

 
1,753,910

 
5,619,769

 
5,804,091

 
34,311,270

Impairment loss
 
—

 
—

 
78,000,000

 
—

 
79,769,480

Total Costs and Expenses
 
5,668,799

 
8,172,312

 
103,060,148

 
22,708,832

 
189,085,047

Loss from Operations
 
(4,680,292
)
 
(7,548,972
)
 
(99,861,003
)
 
(21,423,282
)
 
(179,437,664
)
Other Income/(Expense)
 
 
 
 
 
 
 
 
 
 
Interest expense
 
(60,065
)
 
—

 
(60,065
)
 
—

 
(1,147,358
)
Interest income
 
13,569

 
17,422

 
43,075

 
33,987

 
4,461,302

Contract cancellation loss
 
(566,696
)
 
—

 
(566,696
)
 
—

 
(566,696
)
Realized gain on investments
 
—

 
—

 
—

 
193

 
27,474

Realized gain (loss) on forward contracts
 
—

 
—

 
63,915

 
—

 
(1,430,766
)
Foreign currency transaction gain (loss)
 
(69,894
)
 
350,578

 
193,874

 
(88,049
)
 
643,732

 
 
(683,086
)
 
368,000

 
(325,897
)
 
(53,869
)
 
1,987,688

Net Loss
 
$
(5,363,378
)
 
$
(7,180,972
)
 
$
(100,186,900
)
 
$
(21,477,151
)
 
$
(177,449,976
)
Net Loss Per Share (Basic and diluted)
 
$
(0.15
)
 
$
(0.27
)
 
$
(2.99
)
 
$
(0.80
)
 
 
Weighted Average Common Shares Outstanding (Basic and diluted)
 
35,915,727

 
26,794,143

 
33,562,851

 
26,715,528

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

4
Table of Contents

ASCENT SOLAR TECHNOLOGIES, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
For the Period from Inception (October 18, 2005) through September 30, 2011
 
 
 
 
 
 
 
 
 
 
 
Additional
Paid-In
Capital
 
Accumulated
Deficit
 
Accumulated
Other
Comprehensive
Income
 
Total
Stockholders’
Equity
 
 
Common Stock
 
Preferred Stock
 
 
 
 
 
 
Shares
 
Amount
 
Shares
 
Amount
 
 
 
 
Balance at inception, October 18, 2005
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Proceeds from sale of common stock (11/05 @ $.04 per share)
 
972,000

 
$
97

 
—

 
$
—

 
$
38,783

 
$
—

 
$
—

 
$
38,880

Stock based compensation:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Founders stock
 
—

 
—

 
—

 
—

 
933,120

 
—

 
—

 
933,120

Stock options
 
—

 
—

 
—

 
—

 
26,004

 
—

 
—

 
26,004

Net loss
 
—

 
—

 
—

 
—

 
—

 
(1,207,234
)
 
—

 
(1,207,234
)
Balance, December 31, 2005
 
972,000

 
$
97

 
—

 
$
—

 
$
997,907

 
$
(1,207,234
)
 
$
—

 
$
(209,230
)
Transfer of assets at historical cost (1/06 @ $0.03 per share)
 
1,028,000

 
103

 
—

 
—

 
31,097

 
—

 
—

 
31,200

Proceeds from IPO (7/06 @ $5.50 per unit)
 
3,000,000

 
300

 
—

 
—

 
16,499,700

 
—

 
—

 
16,500,000

IPO costs
 
—

 
—

 
—

 
—

 
(2,392,071
)
 
—

 
—

 
(2,392,071
)
Stock issued to bridge loan lenders (7/06 @ $2.75 per share)
 
290,894

 
29

 
—

 
—

 
799,971

 
—

 
—

 
800,000

Exercise of stock options (9/06 & 12/06 @ $0.10 per share)
 
31,200

 
3

 
—

 
—

 
3,117

 
—

 
—

 
3,120

Stock based compensation—stock options
 
—

 
—

 
—

 
—

 
348,943

 
—

 
—

 
348,943

Net loss
 
—

 
—

 
—

 
—

 
—

 
(4,180,912
)
 
—

 
(4,180,912
)
Balance, December 31, 2006
 
5,322,094

 
$
532

 
—

 
$
—

 
$
16,288,664

 
$
(5,388,146
)
 
$
—

 
$
10,901,050

Exercise of stock options (1/07 - 12/07 @ $.10) (7/07 - 12/07 @ $4.25) (9/07 - 12/07 @ $2.51 - $2.76)
 
169,963

 
17

 
—

 
—

 
346,417

 
—

 
—

 
346,434

Conversion of Class A public warrants at $6.60
 
3,098,382

 
310

 
—

 
—

 
20,449,011

 
—

 
—

 
20,449,321

Redemption of Class A public warrants at $0.25 per share
 
—

 
—

 
—

 
—

 
(48,128
)
 
—

 
—

 
(48,128
)
Conversion of Class B public warrants at $11.00 per share
 
11,000

 
1

 
—

 
—

 
120,999

 
—

 
—

 
121,000

Stock based compensation—stock options
 
—

 
—

 
—

 
—

 
1,734,879

 
—

 
—

 
1,734,879

Proceeds from private placement:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock (3/07 @ $5.77 and 8/07 @ $7.198)
 
2,534,462

 
254

 
—

 
—

 
15,962,003

 
—

 
—

 
15,962,257

Class B public warrants (8/07 @ $1.91)
 
—

 
—

 
 
 
 
 
3,754,468

 
—

 
—

 
3,754,468

Private placement costs
 
—

 
—

 
—

 
—

 
(75,807
)
 
—

 
—

 
(75,807
)
Exercise of representative’s warrants (9/07 - 11/07 @ $6.60 per unit)
 
300,000

 
30

 
—

 
—

 
1,979,970

 
—

 
—

 
1,980,000

Net loss
 
—

 
—

 
—

 
—

 
—

 
(6,503,419
)
 
—

 
(6,503,419
)
Balance, December 31, 2007
 
11,435,901

 
$
1,144

 
—

 
$
—

 
$
60,512,476

 
$
(11,891,565
)
 
$
—

 
$
48,622,055

Components of comprehensive loss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unrealized gain on investments
 
—

 
—

 
—

 
—

 
—

 
—

 
331,068

 
331,068

Net loss
 
—

 
—

 
—

 
—

 
—

 
(13,215,076
)
 
—

 
(13,215,076
)
Total comprehensive loss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(12,884,008
)
Exercise of stock options (1/08 - 12/08 @ $0.10, $2.73, $2.90 & $4.25)
 
133,137

 
13

 
—

 
—

 
120,520

 
—

 
—

 
120,533

Issuance of Restricted Stock
 
69,846

 
7

 
—

 
—

 
(7
)
 
—

 
—

 
—

Conversion of Class B public warrants at $11.00 per share
 
98,800

 
10

 
—

 
—

 
1,086,790

 
—

 
—

 
1,086,800

Stock based compensation
 
—

 
—

 
—

 
—

 
1,881,399

 
—

 
—

 
1,881,399

Proceeds from private placement:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock (3/08 @ $9.262 & 10/08 @ $6.176)
 
4,763,698

 
476

 
—

 
—

 
36,647,217

 
—

 
—

 
36,647,693

Class B public warrants (3/08 @ $3.954)
 
—

 
—

 
—

 
—

 
6,681,884

 
—

 
—

 
6,681,884

Exercise of representative’s warrants (1/08 @ $6.60 per unit)
 
75,000

 
8

 
—

 
—

 
494,992

 
—

 
—

 
495,000

Proceeds from shareholder under Section 16(b)
 
—

 
—

 
—

 
—

 
148,109

 
—

 
—

 
148,109

Proceeds from secondary public offering (5/08 @ $14.00)
 
4,370,000

 
437

 
—

 
—

 
61,179,563

 
—

 
—

 
61,180,000

Costs of secondary public offering
 
—

 
—

 
—

 
—

 
(4,361,358
)
 
—

 
—

 
(4,361,358
)
Balance, December 31, 2008
 
20,946,382

 
$
2,095

 
—

 
$
—

 
$
164,391,585

 
$
(25,106,641
)
 
$
331,068

 
$
139,618,107

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

5
Table of Contents


ASCENT SOLAR TECHNOLOGIES, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME (LOSS)
(Continued)
(Unaudited)
For the Period from Inception (October 18, 2005) through September 30, 2011
 
 
 
 
 
 
 
 
 
 
 
Additional
Paid-In
Capital
 
Accumulated
Deficit
 
Accumulated
Other
Comprehensive
Income
 
Total
Stockholders’
Equity
 
 
Common Stock
 
Preferred Stock
 
 
 
 
 
 
Shares
 
Amount
 
Shares
 
Amount
 
Balance, December 31, 2008
 
20,946,382

 
$
2,095

 
—

 
$
—

 
$
164,391,585

 
$
(25,106,641
)
 
$
331,068

 
$
139,618,107

Components of comprehensive loss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unrealized loss on investments
 
—

 
—

 
—

 
—

 
—

 
—

 
(334,080
)
 
(334,080
)
Net loss
 
—

 
—

 
—

 
—

 
—

 
(20,922,717
)
 
—

 
(20,922,717
)
Total comprehensive loss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(21,256,797
)
Exercise of stock options (1/09 - 12/09 @ $0.10, $2.76 & $4.25)
 
105,169

 
10

 
—

 
—

 
339,606

 
—

 
—

 
339,616

Issuance of Restricted Stock
 
147,679

 
15

 
—

 
—

 
(15
)
 
—

 
—

 
—

Stock based compensation
 
—

 
—

 
—

 
—

 
2,676,957

 
—

 
—

 
2,676,957

Proceeds from private placement:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock (10/09 @ $6.50)
 
769,230

 
77

 
—

 
—

 
4,999,918

 
—

 
—

 
4,999,995

Proceeds from public offering (10/09 @ $6.50)
 
4,615,385

 
461

 
—

 
—

 
29,999,542

 
—

 
—

 
30,000,003

Costs of public offering
 
—

 
—

 
—

 
—

 
(2,062,866
)
 
—

 
—

 
(2,062,866
)
Balance, December 31, 2009
 
26,583,845

 
$
2,658

 
—

 
$
—

 
$
200,344,727

 
$
(46,029,358
)
 
$
(3,012
)
 
$
154,315,015

Components of comprehensive loss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unrealized gain on investments
 
—

 
—

 
—

 
—

 
—

 
—

 
2,786

 
2,786

Net loss
 
—

 
—

 
—

 
—

 
—

 
(31,233,718
)
 
—

 
(31,233,718
)
Total comprehensive loss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(31,230,932
)
Proceeds from public offering (11/10 @ $4.15)
 
5,250,000

 
525

 
—

 
—

 
21,786,975

 
—

 
—

 
21,787,500

Costs of public offering
 
—

 
—

 
—

 
—

 
(1,409,937
)
 
—

 
—

 
(1,409,937
)
Exercise of stock options (1/10 – 12/10 @ $0.10, $2.90, $2.73, $2.76 & $3.17)
 
161,330

 
16

 
—

 
—

 
390,985

 
—

 
—

 
391,001

Issuance of Restricted Stock
 
270,412

 
27

 
—

 
—

 
(27
)
 
—

 
—

 
—

Stock based compensation
 
—

 
—

 
—

 
—

 
2,713,468

 
—

 
—

 
2,713,468

Balance, December 31, 2010
 
32,265,587

 
$
3,226

 
—

 
$
—

 
$
223,826,191

 
$
(77,263,076
)
 
$
(226
)
 
$
146,566,115

Components of comprehensive loss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unrealized gain on investments
 
—

 
—

 
—

 
—

 
—

 
—

 
3,126

 
3,126

Net loss
 
—

 
—

 
—

 
—

 
—

 
(100,186,900
)
 
—

 
(100,186,900
)
Total comprehensive loss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(100,183,774
)
Proceeds from private offering (8/11 @ $1.15)
 
6,400,000

 
640

 
—

 
—

 
7,359,360

 
—

 
—

 
7,360,000

Costs of private offering
 
—

 
—

 
—

 
—

 
(123,973
)
 
—

 
—

 
(123,973
)
Exercise of stock options (1/11 – 9/11 @ $0.10)
 
57,000

 
6

 
—

 
—

 
5,694

 
—

 
—

 
5,700

Issuance of Restricted Stock
 
166,020

 
17

 
—

 
—

 
(17
)
 
—

 
—

 
—

Issuance of Commons Stock to service provider (5/11 @ $1.31)
 
45,000

 
4

 
—

 
—

 
58,946

 
—

 
—

 
58,950

Stock based compensation
 
—

 
—

 
—

 
—

 
1,279,516

 
—

 
—

 
1,279,516

Balance, September 30, 2011
 
38,933,607

 
$
3,893

 
—

 
$
—

 
$
232,405,717

 
$
(177,449,976
)
 
$
2,900

 
$
54,962,534

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


6
Table of Contents

ASCENT SOLAR TECHNOLOGIES, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 
 
For the Nine Months Ended
 
For the Period 
from Inception
(October 18, 2005)
through
September 30,
 
 
September 30,
 
 
 
2011
 
2010
 
2011
Operating Activities:
 
 
 
 
 
 
Net loss
 
$
(100,186,900
)
 
$
(21,477,151
)
 
$
(177,449,976
)
Adjustments to reconcile net loss to cash used in operating activities:
 
 
 
 
 
 
Depreciation and amortization
 
6,146,953

 
4,519,779

 
16,952,015

Stock based compensation
 
1,279,516

 
2,152,917

 
11,594,286

Common stock issued for services
 
58,950

 
—

 
58,950

Realized loss (gain) on forward contracts
 
(63,915
)
 
—

 
1,430,766

Foreign currency transaction loss (gain)
 
(193,874
)
 
88,049

 
(643,732
)
Charge off of deferred financing costs to interest expense
 
—

 
—

 
198,565

Charge off of bridge loan discount to interest expense
 
—

 
—

 
800,000

Impairment loss
 
78,000,000

 
—

 
79,769,480

Cancellation fees and forfeited deposits on equipment
 
566,696

 
—

 
641,462

Changes in operating assets and liabilities:
 
 
 
 
 
 
Accounts receivable
 
54,471

 
(521,684
)
 
(430,555
)
Related party receivables
 
2,524

 
3,330

 
—

Inventories
 
(1,245,296
)
 
(772,455
)
 
(3,122,130
)
Prepaid expenses and other current assets
 
65,380

 
204,705

 
(444,968
)
Accounts payable
 
(813,435
)
 
(151,132
)
 
279,014

Related party payable
 
(54,037
)
 
(143,493
)
 
—

Accrued expenses
 
(436,349
)
 
(91,841
)
 
1,374,501

Deferred revenue
 
(250,705
)
 
293,905

 
—

Warranty reserve
 
8,973

 
—

 
24,873

Net cash used in operating activities
 
(17,061,048
)
 
(15,895,071
)
 
(68,967,449
)
Investing Activities:
 
 
 
 
 
 
Purchases of available-for-sale-securities
 
(26,244,858
)
 
(40,008,641
)
 
(904,509,292
)
Maturities and sales of available-for-sale securities
 
26,505,366

 
54,752,661

 
887,283,166

Purchase of property, plant and equipment
 
(9,077,497
)
 
(1,974,346
)
 
(47,976,786
)
Deposits on manufacturing equipment
 
—

 
(6,625,491
)
 
(79,948,708
)
Restricted cash for manufacturing equipment
 
1,786,653

 
—

 
(1,472,697
)
Patent activity costs
 
(63,312
)
 
(58,120
)
 
(314,980
)
Deposit on building
 
—

 
—

 
(100,000
)
Net cash provided by (used in) investing activities
 
(7,093,648
)
 
6,086,063

 
(147,039,297
)
Financing Activities:
 
 
 
 
 
 
Proceeds from bridge loan financing
 
—

 
—

 
1,600,000

Repayment of bridge loan financing
 
—

 
—

 
(1,600,000
)
Payment of debt financing costs
 
—

 
—

 
(273,565
)
Payment of equity offering costs
 
—

 
—

 
(10,302,040
)
Proceeds from debt
 
—

 
—

 
7,700,000

Repayment of debt
 
(522,752
)
 
(161,748
)
 
(1,127,366
)
Repayment of debt-related party
 
—

 
(350,000
)
 
(350,000
)
Proceeds from shareholder under Section 16(b)
 
—

 
—

 
148,109

Proceeds from issuance of stock and warrants
 
7,241,727

 
55,012

 
230,127,232

Redemption of Class A warrants
 
—

 
—

 
(48,128
)
Net cash provided by (used in) financing activities
 
6,718,975

 
(456,736
)
 
225,874,242

Net change in cash and cash equivalents
 
(17,435,721
)
 
(10,265,744
)
 
9,867,496

Cash and cash equivalents at beginning of period
 
27,303,217

 
21,717,215

 
—

Cash and cash equivalents at end of period
 
$
9,867,496

 
$
11,451,471

 
$
9,867,496

Supplemental Cash Flow Information:
 
 
 
 
 
 
Cash paid for interest
 
$
60,065

 
$
—

 
$
60,489

Cash paid for income taxes
 
$
—

 
$
—

 
$
—

Non-Cash Transactions:
 
 
 
 
 
 
ITN initial contribution of assets for equity
 
$
—

 
$
—

 
$
31,200

Note with ITN and related capital expenditures
 
$
—

 
$
1,100,000

 
$
1,100,000


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

7

ASCENT SOLAR TECHNOLOGIES, INC.
(A Development Stage Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1. ORGANIZATION
Ascent Solar Technologies, Inc. (“Ascent” or “the Company”) was incorporated on October 18, 2005 from the separation by ITN Energy Systems, Inc. (“ITN”) of its Advanced Photovoltaic Division and all of that division’s key personnel and core technologies. ITN, a private company incorporated in 1994, is an incubator dedicated to the development of thin-film, photovoltaic (“PV”), battery, fuel cell and nano technologies. Through its work on research and development contracts for private and governmental entities, ITN developed proprietary processing and manufacturing know-how applicable to PV products generally, and to Copper-Indium-Gallium-diSelenide (“CIGS”) PV products in particular. ITN formed Ascent to commercialize its investment in CIGS PV technologies. In January 2006, in exchange for 1,028,000 shares of common stock of Ascent, ITN assigned to Ascent certain CIGS PV technologies and trade secrets and granted to Ascent a perpetual, exclusive, royalty-free worldwide license to use, in connection with the manufacture, development, marketing and commercialization of CIGS PV to produce solar power, certain of ITN’s existing and future proprietary and control technologies that, although non-specific to CIGS PV, Ascent believes will be useful in its production of PV modules for its target markets. Upon receipt of the necessary government approvals and pursuant to novation in early 2007, ITN assigned government-funded research and development contracts to Ascent and also transferred the key personnel working on the contracts to Ascent. Today, ITN provides Ascent a limited amount of technical services.

NOTE 2. BASIS OF PRESENTATION
The Company’s activities to date have consisted substantially of raising capital, research and development, establishment of its initial production line (“FAB1”) and development of its expansion plant (“FAB2”). Revenues to date have been primarily generated from the Company’s governmental research and development (“R&D”) contracts and have not been significant. The Company’s planned principal operations to commercialize flexible PV modules have commenced, but have generated limited revenue to date. Accordingly, the Company is considered to be in the development stage and has presented its financial statements under the provisions of ASC Topic 915 - Development Stage Entities which requires additional disclosure of inception to date activity in the Condensed Statements of Operations, Condensed Statements of Stockholders’ Equity and Comprehensive Income (Loss) and Condensed Statements of Cash Flows.
The accompanying unaudited condensed 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 10 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 Balance Sheet at December 31, 2010 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, 2010 . These condensed 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, 2010 .
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 nine months ended September 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.

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, 2010 . With the exception of those discussed below, there have been no significant changes to these policies and no recent accounting pronouncements or changes in accounting pronouncements during the nine months ended September 30, 2011 , that are of significance or potential significance to the Company.
Recent Accounting Pronouncements: In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement (Topic 820) . This ASU provides a consistent definition of fair value and sets forth common requirements for measurement of and disclosure about fair value in accordance with U.S. generally accepted accounting principles (“GAAP”) and International

8

Financial Reporting Standards (“IFRS”). ASU 2011-04 amends existing fair value measurement and disclosure requirements including application of highest and best use and valuation premise concepts, measuring the fair value of an instrument classified in a reporting entity’s shareholders’ equity, measuring the fair value of financial instruments that are valued within a portfolio and disclosures in measurement categorized within Level 3 of the fair value hierarchy. This ASU is effective on a prospective basis during interim and annual periods beginning after December 15, 2011 and early application is not permitted. The Company does not expect the adoption of ASU 2011-04 will have a material impact on the Company’s financial position, results of operations or cash flows.
In June 2011, the FASB issued ASU 2011-05, Comprehensive Income (Topic 820). This ASU seeks to improve comparability, consistency and transparency of financial reporting with respect to comprehensive income by eliminating the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity, among other amendments. The amendments of this ASU require all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or two separate but consecutive statements. This ASU is effective for fiscal years and interim periods beginning after December 15, 2011 and early adoption is permitted. The adoption of ASU 2011-05 will affect only financial statement presentation and will not impact the Company’s financial position, results of operations or cash flows.

NOTE 4. LIQUIDITY AND CONTINUED OPERATIONS
As of September 30, 2011 , the Company had approximately $27.1 million in cash and investments. An additional $1.5 million in cash is restricted for future payments on equipment. As discussed in Note 2, the Company is in the development stage and is currently incurring significant losses from operations as it works toward commercialization. The Company made cash payments of approximately $9.1 million in the nine months ended September 30, 2011 for property, plant and equipment. The Company has remaining obligations for equipment purchases in the approximate amount of $3.8 million, of which approximately $1.5 million is recorded in “Accrued property, plant and equipment”.
On March 31, 2011, we announced a change in strategy that, in the near term, will focus our solar module technology on applications for emerging and specialty markets. Longer term the Company intends to participate in the building integrated market. The change in strategy resulted in a change in leadership and sizing the company to a new cost structure, primarily through the termination of a portion of the Company’s workforce. The Company incurred a charge of approximately $450,000 in the quarter ended March 31, 2011, comprised of severance costs. This charge has been expensed as “Research and development” and “Selling, general and administrative” in the Condensed Statement of Operations in the amounts of approximately $72,000 and $378,000, respectively. The Company made payments of approximately $223,000 during the nine months ended September 30, 2011 . The Company expects to make payments of approximately $100,000 during the quarter ended December 31, 2011 , and the remaining estimated amount of $127,000 over the following four months. Approximately $227,000 is recorded under "Accrued expenses" in the Condensed Balance Sheets as of September 30, 2011.
Due to recent significant adverse changes in market conditions, particularly the decreases in current and expected average selling prices for PV modules, the Company concluded in the quarter ended June 30, 2011 that the carrying value of Property, Plant and Equipment and Deposits on manufacturing equipment may not be recoverable and a non-cash impairment charge of approximately $78.0 million was recorded. See Note 10. Impairment for additional information.
The Company commenced limited production on the FAB1 production line in the first quarter of 2009 and the FAB2 production line in 2010. The Company does not expect that sales revenue and cash flows from the FAB1 and FAB2 production lines will be sufficient to support operations and cash requirements until actual full production capacity on the FAB2 production line is achieved. Changes in the level of expected operating losses, the timing of planned capital expenditures or other factors may negatively impact cash flows and reduce current cash and investments faster than anticipated. The Company may need to raise additional capital in the future. There is no assurance that the Company will be able to raise additional capital on acceptable terms or at all. The Company expects its current cash balance to be sufficient to cover planned capital and operational expenditures for at least the next 12 months based on currently known factors.

NOTE 5. RESTRICTED CASH
The Company established an irrevocable letter of credit with its bank in favor of an equipment vendor in the approximate amount of $3.2 million in February 2011. Approximately $1.7 million was paid in the quarter ending September 30, 2011 and the remainder of approximately $1.5 million is expected to be paid in the first quarter of 2012. The letter of credit is collateralized by an interest bearing account. The amount is reflected as “Restricted cash” under “Other Assets” in the Condensed Balance Sheets.

NOTE 6. FAIR VALUE MEASUREMENTS

9

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The Company uses fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, to measure fair value:
•
Level 1—Quoted prices in active markets for identical assets or liabilities.
•
Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
•
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The following table represents the Company’s fair value hierarchy for its financial assets measured at fair value on a recurring basis and its classification on the balance sheet as of September 30, 2011 :
 
 
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Cash
Equivalents
 
Investments
Financial Assets:
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government securities
 
$
—

 
$
10,105,361

 
$
—

 
$
10,105,361

 
$
—

 
$
10,105,361

Municipal bonds
 
—

 
2,625,514

 
—

 
2,625,514

 
—

 
2,625,514

Money market funds
 
1,160,391

 
—

 
—

 
1,160,391

 
1,160,391

 
—

Corporate securities
 
—

 
4,498,151

 
—

 
4,498,151

 
—

 
4,498,151

 
 
$
1,160,391

 
$
17,229,026

 
$
—

 
$
18,389,417

 
$
1,160,391

 
$
17,229,026

As of the balance sheet date, the Company held securities issued by U.S. government agencies (AA+/Aaa/AAA ratings), municipalities (AA/Aa2/Aa3/AA- ratings) and A-1/A-1+ rated corporate notes. Approximately $17.2 million of these securities are classified as Level 2 because the Company does not believe that it is possible to obtain a firm, up-to-date price of such securities from, for example, a major exchange; and as a result, the Company relies on its brokerage firm and investment manager to report its fair value of such securities at the end of each month. Investments have not been transferred between levels.
In addition to the items measured at fair value on a recurring basis, the Company also measured certain assets at fair value on a nonrecurring basis. As a result of an impairment analysis, the Company recorded an impairment loss of $78.0 million to write down its long-lived assets to fair value at June 30, 2011 (See Note 10. Impairment for additional information). These fair value measurements rely primarily on Company-specific inputs and the Company’s assumptions about the use of the assets, as observable inputs are not available. Accordingly, the Company determined that these fair value measurements reside primarily within Level 3 of the fair value hierarchy.

NOTE 7. INVESTMENTS
Securities held by the Company as of September 30, 2011 are classified as available-for-sale and consisted of U.S. government securities, municipal bonds and corporate securities. Such investments are carried at fair value, based on quoted market prices with the unrealized holding gains and losses reported as Accumulated other comprehensive income (loss) in the stockholders’ equity section of the Condensed Balance Sheets. Realized gains and losses on sales of securities are computed using the specific identification method. The Company evaluates declines in market value for potential impairment. If the decline results in a value below cost and is determined to be other than temporary, the investment is written down to its impaired value and a new cost basis is established. A summary of available-for-sale securities as of September 30, 2011 is as follows:
 
 
 
Amortized
Cost
 
Gross Unrealized
Gains
 
Gross Unrealized
Losses
 
Estimated Fair Value
U.S. government securities
 
$
10,102,065

 
$
3,884

 
$
(588
)
 
$
10,105,361

Municipal bonds
 
2,625,991

 
171

 
(648
)
 
2,625,514

Corporate securities
 
4,498,070

 
81

 
—

 
4,498,151

Total
 
$
17,226,126

 
$
4,136

 
$
(1,236
)
 
$
17,229,026

Contractual maturities of available-for-sale investments as of September 30, 2011 were all one year or less as follows:

10

 
 
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
One year or less
 
$
17,226,126

 
$
4,136

 
$
(1,236
)
 
$
17,229,026

The Company typically invests in highly rated securities with low probabilities of default. The Company’s investment policy specifies minimum investment grade criteria, types of acceptable investments, concentration limitations and duration guidelines.
All securities having an unrealized loss as of September 30, 2011 have been in a loss position for less than twelve months.

NOTE 8. TRADE RECEIVABLES
Accounts receivable consist of amounts generated from government contracts and sales of PV modules. Accounts receivable totaled $430,555 and $485,026 as of September 30, 2011 and December 31, 2010, respectively. All accounts receivable as of September 30, 2011 are deemed collectible.
Provisional Indirect Cost Rates —During 2010 and 2011 , the Company billed the government under cost-based R&D contracts at provisional billing rates which permit the recovery of indirect costs. These rates are subject to audit on an annual basis by the government agencies’ cognizant audit agency. The cost audit will result in the negotiation and determination of the final indirect cost rates. In the opinion of management, re-determination of any cost-based contracts will not have a material effect on the Company’s financial position or results of operations.
Contract Status —The Company has authorized but not completed contracts on which work is in process as follows as of September 30, 2011 and December 31, 2010 :
 
 
 
As of September 30,
 
As of December 31,
 
 
2011
 
2010
Total contract price of initial contract awards, including exercised options and approved change orders (modifications)
 
$
11,427,581

 
$
11,426,858

Completed to date
 
(9,942,187
)
 
(7,289,426
)
Authorized backlog
 
$
1,485,394

 
$
4,137,432


NOTE 9. PROPERTY, PLANT AND EQUIPMENT
The following table summarizes property, plant and equipment as of September 30, 2011 and December 31, 2010 :
 
 
 
As of September 30,
 
As of December 31,
 
 
2011
 
2010
Building
 
$
5,763,235

 
$
19,506,814

Furniture, fixtures, computer hardware and computer software
 
339,820

 
1,151,745

Manufacturing machinery and equipment
 
29,711,801

 
72,111,366

Leasehold improvements
 
884,709

 
884,709

Net depreciable property, plant and equipment
 
36,699,565

 
93,654,634

Manufacturing machinery and equipment in progress
 
—

 
17,054,686

Property, plant and equipment
 
36,699,565

 
110,709,320

Less: Accumulated depreciation and amortization
 
(6,575,513
)
 
(10,706,478
)
Net property, plant and equipment
 
$
30,124,052

 
$
100,002,842

During the quarter ended June 30, 2011, an impairment charge in the amount of approximately $74.5 million was taken against Property, Plant and Equipment. This impairment, combined with a charge of approximately $3.5 million taken against Deposits on manufacturing equipment, resulted in a total write-down of $78.0 million in the quarter ended June 30, 2011. See Note 10. Impairment and Note 12. Deposits on Manufacturing Equipment.
Depreciation and amortization expense for the three months ended September 30, 2011 and 2010 was $1,370,140 and

11

$1,950,727, respectively, and for the nine months ended September 30, 2011 and 2010 was $6,137,788 and $4,513,130, respectively. Depreciation and amortization expense is recorded under “Research and development” expense and “Selling, general and administrative” expense in the Condensed Statements of Operations.
During the third quarter of 2011, the Company updated its estimates for service lives of certain manufacturing tools in order to better match depreciation expense with the periods these assets are expected to generate revenue. The change in services lives was accounted for prospectively as a change in accounting estimate effective July 1, 2011. The effect of this change on Net Loss and basic and diluted earnings per share was an increase of $438,951 and $0.01, respectively, for the nine months ended September 30, 2011.
The Company incurred and capitalized interest costs related to the FAB2 building loan as follows during the nine months ended September 30, 2011 and the year ended December 31, 2010 .
 
 
 
As of September 30,
 
As of December 31,
 
 
2011
 
2010
Interest cost incurred
 
$
350,268

 
$
479,898

Interest cost capitalized
 
(290,203
)
 
(479,898
)
Interest expense, net
 
$
60,065

 
$
—


NOTE 10. IMPAIRMENT
The Company analyzes its long-lived assets for impairment, both individually and as a group, whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. During the quarter ended June 30, 2011, as a result of recent significant adverse changes in market conditions, particularly the decreases in current and expected average selling prices for PV modules, the Company concluded that the carrying value of Property, Plant and Equipment may not be recoverable. This analysis utilized projected selling prices and operating costs under alternative scenarios to arrive at total estimated undiscounted cash flows. As a result of the analysis, the Company recorded an impairment loss of $78.0 million in the carrying value of Property, Plant and Equipment and Deposits on manufacturing equipment. The impairment loss was measured as the amount by which the carrying amount of the underlying assets exceeded fair value, as calculated using the expected present value technique. Actual cash flows may differ from the forecasts used in the analysis. This analysis incorporated many different assumptions and estimates which involve a high degree of judgment. These assumptions and estimates, which may change significantly in the future, have a substantial impact on the actual impairment loss recorded.

NOTE 11. INVENTORIES
Inventories consisted of the following at September 30, 2011 and December 31, 2010 :
 
 
 
As of September 30,
 
As of December 31,
 
 
2011
 
2010
Raw materials
 
$
2,868,181

 
$
1,468,425

Work in process
 
35,377

 
317,468

Finished goods
 
218,572

 
90,941

Total
 
$
3,122,130

 
$
1,876,834


During the quarter ended September 30, 2011, the Company recognized a lower of cost or market adjustment on certain raw materials in the amount of $171,255. This expense is included within “Research and development” expense in the Condensed Statements of Operations.

NOTE 12. DEPOSITS ON MANUFACTURING EQUIPMENT
As of September 30, 2011 , deposits on manufacturing equipment related to the purchase of equipment not yet delivered to the FAB2 production line were approximately $3.4 million . The equipment purchase agreements are conditional purchase obligations that have milestone-based deliverables, such as the Company’s acceptance of design requirements and successful installation and commissioning of the equipment. During the quarter ended June 30, 2011, an impairment charge in the amount of approximately $3.5 million was taken against deposits on manufacturing equipment. This impairment charge was recorded under Impairment loss in the Condensed Statements of Operations. See Note 10. Impairment.



12

NOTE 13. DEBT
On February 8, 2008, the Company acquired an approximately 120,000 square foot manufacturing and office facility in Thornton, Colorado, for approximately $5.5 million. The purchase was financed by a promissory note, deed of trust and construction loan agreement (the “Construction Loan”) with the Colorado Housing and Finance Authority (“CHFA”), which provided the Company borrowing availability of up to $7.5 million for the building and building improvements. The Company paid approximately $1.3 million in cash and was advanced approximately $4.2 million from CHFA to fund the initial acquisition of the property. The Construction Loan terms required payments of interest at 6.6% on the outstanding balance. On January 29, 2009, the Construction Loan was converted to a permanent loan pursuant to a Loan Modification Agreement between the Company and CHFA (the “Permanent Loan”). The Permanent Loan has an interest rate of 6.6% and the principal will be amortized over a period of approximately 19 years and one month consistent with a maturity date of 20 years after the incurrence of the promissory note and Construction Loan. A loan commitment fee of $75,000 was paid in 2008 and is reflected on the balance sheet in non-current assets. This fee is being amortized into interest expense over the 20 year life of the Loan. The Company will incur a prepayment penalty if the Permanent Loan is prepaid prior to December 31, 2015 equal to the sum of (i) the present value of the total principal and interest payments due under the Note from the prepayment date to December 31, 2015, and (ii) the present value of the remaining principal balance of the Note that would have been due as of December 31, 2015, less the principal amount of the Note outstanding. Further, pursuant to certain negative covenants contained in the deed of trust associated with the Permanent Loan, until the Permanent Loan is repaid and all of the Company’s secured obligations are performed in full, the Company may not, among other things, without CHFA’s prior written consent (which by the terms of the deed of trust is subject to a reasonableness requirement): create or incur additional indebtedness (other than obligations created or incurred in the ordinary course of business); merge or consolidate with any other entity; or make loans or advances to the Company’s officers, shareholders, directors or employees.
On January 7, 2010, the Company and ITN entered into an equipment purchase agreement whereby the Company purchased seven research and development vacuum and deposition chambers for $1,100,000 from ITN. Payments in the amount of $350,000 were remitted to ITN in January 2010 and January 2011. A final payment, without interest, in the amount of $400,000 is due on January 15, 2012.

As of September 30, 2011 , future principal payments on long-term debt are due as follows:
 
 
 
2011
$
59,505

2012
648,059

2013
264,935

2014
282,960

2015
302,210

Thereafter
5,764,965

 
$
7,322,634


NOTE 14. DERIVATIVE FINANCIAL INSTRUMENTS
The Company is actively engaged in purchasing manufacturing equipment internationally and is exposed to foreign currency risk. In July 2008 and March 2009, the Company entered into fair value hedges utilizing forward contracts designed to match scheduled contractual payments to equipment suppliers which are denominated in Euros and Yen. The total notional value of the Euro forward contracts was approximately €6.4 million with various contract settlement dates beginning September 15, 2008 through July 31, 2009. The total notional value of the Yen forward contracts was approximately ¥521.4 million with contract settlement dates of March and April 2009. The Company elected not to use hedge accounting and accordingly, the unrealized gain and loss on each forward contract was determined at each balance sheet date based upon current market rates and is reported as an Unrealized gain or loss on forward contracts in the Condensed Statements of Operations. Upon settlement of the forward contracts, a realized gain or loss is reported in the Condensed Statements of Operations as Realized gain (loss) on forward contracts.
Although the hedging activity is designed to fix the dollar amount to be expended, the asset purchased is recorded at the spot rate in effect as of the date of the payment to the supplier. The difference between the spot rate and the forward rate has been reported as Realized gain (loss) on forward contracts. From time to time the Company holds foreign currency options to hedge against equipment payments to be remitted in foreign currencies. Derivative financial instruments are not used for speculative or trading purposes.


13

At September 30, 2011 , approximately $1.5 million included in Restricted cash was held in Euros. Accounts denominated in foreign currencies are held in the Company’s bank account for future payments to equipment suppliers. Changes in exchange rates related to foreign currencies on deposit in the Company’s bank accounts are reflected as Foreign currency transaction gain (loss) in the Condensed Statements of Operations.

NOTE 15. STOCKHOLDERS’ EQUITY
At September 30, 2011, the Company’s authorized capital stock consists of 75,000,000 shares of common stock, $0.0001 par value, and 25,000,000 shares of preferred stock, $0.0001 par value. Each share of common stock has the right to one vote. On October 27, 2011 the Company's Shareholders approved an increase in the number of authorized shares of common stock to 125,000,000.
Preferred stock, $0.0001 par value per share, may be issued in classes or series. Designations, powers, preferences, rights, qualifications, limitations and restrictions are determined by the Company’s Board of Directors.
Initial Public Offering: The Company completed its initial public offering (“IPO”) of 3,000,000 units on July 14, 2006. Each unit consisted of one share of common stock, one redeemable Class A warrant and two non-redeemable Class B warrants. The IPO price was $5.50 per unit. The gross proceeds of the offering were $16,500,000. Ascent’s net proceeds from the offering, after deducting the underwriter’s discount of $1,097,250 and other fees and expenses, aggregated approximately $14,000,000.
The common stock and Class A and Class B warrants traded only as a unit through August 9, 2006, after which the common stock, the Class A warrants and the Class B warrants began trading separately.
Class A warrants. On May 24, 2007, the Company publicly announced that it intended to redeem its outstanding Class A warrants. The Class A warrants became eligible for redemption by the Company at $0.25 per warrant on April 16, 2007, when the last reported sale price of the Company’s common stock had equaled or exceeded $9.35 for five consecutive trading days. There were 3,290,894 Class A warrants issued in connection with the Company’s IPO, including the warrants issued to the Bridge Noteholders. The Class A warrants were exercisable at a price of $6.60 per share.
The exercise period ended June 22, 2007. During the exercise period, 3,098,382 Class A warrants (94.1% of the total outstanding) were exercised for an equal number of shares of common stock, and the Company received $20,449,321 in proceeds from the warrant exercises. At the end of the exercise period, 192,512 Class A warrants remained outstanding. The Company has set aside funds with its warrant transfer agent to redeem the outstanding warrants for $0.25 per warrant, or a total cost of $48,128. As of September 30, 2011 , 9,090 Class A warrants remained unredeemed.

Class B warrants. The Class B warrants included in the units became exercisable on August 10, 2006. The exercise price of a Class B public warrant is $11.00. The Class B warrants expired on July 10, 2011. The Company does not have the right to redeem the Class B warrants. During the years ended December 31, 2008 and 2007, 98,800 and 11,000 Class B warrants, respectively were exercised resulting in proceeds to the Company of approximately $1.09 million and $121,000 respectively.
IPO warrants. Warrants to purchase 300,000 units at $6.60 were issued to underwriters of the Company’s IPO in July 2006 (representative’s warrants). A unit consists of one share of common stock, one Class A redeemable warrant and two Class B non-redeemable warrants. The Class B warrants expired on July 10, 2011. Upon exercise of the representative’s warrants, holders will be forced to choose whether to exercise the underlying Class A warrants or hold them for redemption. As noted above, on June 25, 2007, any Class A warrants then outstanding expired and became redeemable.
Representative’s warrants to purchase 150,000 units have been exercised as of December 31, 2007, as have the 150,000 underlying Class A warrants resulting in an issuance of 300,000 shares of common stock and 300,000 Class B warrants for total proceeds to the Company of $1.98 million. During the year ended December 31, 2008 an additional 37,500 units were exercised, as have the 37,500 underlying Class A warrants resulting in an issuance of 75,000 shares of common stock and 75,000 Class B warrants for total proceeds to the Company of $495,000. To the extent that holders of representative’s warrants are entitled to receive Class A warrants upon exercise of the representative’s warrants, those warrants will be immediately subject to call for redemption at $0.25 per warrant. The holders will then have to decide whether to exercise their Class A warrants or hold them for redemption. As of September 30, 2011 , 112,500 representative’s warrants remained unexercised.
Private Placement of Securities: The Company completed a private placement of securities with Norsk Hydro Produksjon AS (“Hydro”) in March 2007. Hydro is a subsidiary of Norsk Hydro ASA. Hydro purchased 1,600,000 shares of the Company’s common stock (representing 23% of the Company’s then outstanding common stock post transaction) for an aggregate purchase price of $9,236,000. The Company recorded $75,807 of costs associated with the private placement as a reduction to Additional paid in capital on the Company’s Balance Sheets. In connection with the private placement, Hydro was

14

granted options to purchase additional shares and warrants.
In August 2007, Hydro acquired an additional 934,462 shares of the Company’s common stock and 1,965,690 Class B warrants through the exercise of an option previously granted to Hydro and approved by the Company's stockholders in June 2007. Gross proceeds to the Company were $10.48 million, and reflected per share and per warrant purchase prices equal to the average of the closing bids of each security, as reported by NASDAQ, for the five consecutive trading days preceding exercise. After acquiring these additional shares, Hydro again held 23% of the then outstanding common shares, after its holdings were diluted as the result of the redemption of Class A warrants and 23% of total outstanding Class B warrants. Pursuant to a second option that was approved by Ascent’s stockholders in June 2007, beginning December 13, 2007, Hydro was entitled to purchase additional shares and Class B warrants up to a maximum of 35% of each class of security.
In March 2008, Hydro acquired an additional 2,341,897 shares of the Company’s common stock and 1,689,905 Class B warrants through the exercise of the second option previously granted to Hydro and approved by Ascent’s stockholders in June 2007, resulting in Hydro ownership of approximately 35% of each class of security. Gross proceeds to the Company were $28.4 million, and reflected per share and per warrant purchase prices were equal to the average of the closing bids of each security, as reported by NASDAQ, for the five consecutive trading days preceding exercise. As a result of the Company’s Secondary Public Offering in May 2008, Hydro’s holdings were diluted to approximately 27% of the then outstanding common stock.
On October 8, 2008, Hydro acquired an additional 2,421,801 shares of the Company’s common stock. The purchase resulted in a return to Hydro’s ownership of approximately 35% of the Company’s then outstanding common stock. Gross proceeds to the Company from the follow on investment were approximately $15 million, and reflect per share purchase prices equal to the average of the closing bids of each security, as reported by NASDAQ, for the five consecutive trading days preceding the purchase. Until June 15, 2009, the second option entitles Hydro to purchase from the Company additional restricted shares of common stock and Class B warrants to maintain ownership of up to 35% of issued and outstanding common stock and Class B warrants.
On September 29, 2009, the Company entered into a securities purchase agreement with Hydro under which the Company agreed to sell, and Hydro agreed to purchase, 769,230 restricted shares of the Company’s common stock for approximately $5.0 million in a private placement exempt from registration under the Securities Act. The restricted shares were sold to Hydro at a per share price equal to $6.50. The private placement closed on October 6, 2009, at which time the Company and Hydro executed a Registration Rights Agreement, pursuant to which Hydro was granted demand and piggy-back registration rights.
On August 12, 2011, the Company completed a strategic alliance with TFG Radiant Investment Group Ltd. and its affiliates (“TFG Radiant”). As part of this strategic alliance, TFG Radiant acquired 6,400,000 shares of the Company's common stock at a price of $1.15 per share or $7,360,000 in the aggregate. The closing price of the Company's common stock on August 12, 2011 was $0.73. In addition, TFG Radiant received an option to acquire an additional 9,500,000 shares of the Company's common stock at an exercise price of $1.55 per share. The option was approved by the Company's stockholders on October 27, 2011. This approval eliminated certain registration rights which would have been otherwise available to TFG Radiant related to the 6,400,000 share purchase. TFG Radiant may not exercise this option unless and until TFG Radiant meets a specified milestone associated with the construction of the first East Asia FAB. This option expires on February 12, 2014.

Secondary Public Offerings: On May 15, 2008, the SEC declared effective the Company’s Registration Statement on Form S-3 (Reg. No. 333-149740), and the Company completed a secondary public offering of 4,370,000 shares of common stock, which included 570,000 shares issued upon the underwriter’s exercise of their overallotment in full. The offering price of $14.00 per share resulted in proceeds of $61.2 million. After deducting underwriting discounts and commissions and offering expenses of approximately $4.4 million, net proceeds to the Company were approximately $56.8 million.
On October 1, 2009, the Company entered into an underwriting agreement with Barclays Capital Inc. providing for the sale in a firm commitment offering of 4,615,385 shares of the Company’s common stock at a price to the public of $6.50 per share. The offer and sale of the shares were registered under the Securities Act of 1933, as amended, pursuant to the Company’s Registration Statement on Form S-3 (File No. 333-156665), which became effective with the SEC on January 16, 2009. The offering closed on October 6, 2009 with net proceeds to the Company of approximately $27.9 million.
On November 11, 2010, the Company entered into an underwriting agreement with Cowen and Company, LLC, Rodman & Renshaw LLC and ThinkEquity LLC providing for the sale in a firm commitment offering of 5,250,000 shares of the Company’s common stock at a price to the public of $4.15 per share. The offer and sale of the shares were registered under the Securities Act of 1933, as amended, pursuant to the Company’s Registration Statement on Form S-3 (File No. 333-156665), which became effective with the SEC on January 16, 2009. The offering closed on November 16, 2010 with net proceeds to the

15

Company of approximately $20.4 million.
On February 28, 2011, the Company entered into an At-The-Market Equity Offering Sales Agreement with Stifel, Nicolaus & Company, Incorporated, or Stifel Nicolaus Weisel, under which the Company may issue and sell from time to time up to $25,000,000 of common stock. The Company filed a prospectus supplement to the prospectus dated January 16, 2009. Sales of common stock, if any, will be made at market prices by any method that is deemed to be an “at the market” offering as defined in Rule 415 under the Securities Act, including sales made directly on the NASDAQ Global Market and any other trading market for the Company’s common stock, and sales to or through a market maker other than on an exchange. The aggregate compensation payable to Stifel Nicolaus Weisel as sales agent shall be equal to 3% of the gross sales price of the shares sold. The offering of common stock pursuant to the sales agreement will terminate upon the earlier of (1) the sale of all the shares of our common stock offered by this prospectus supplement and the accompanying prospectus or (2) the termination of the sales agreement by the Company or by Stifel Nicolaus Weisel. As of September 30, 2011 , no shares had been sold under this facility.
Other Proceeds: During the three months ended March 31, 2008, the Company received proceeds from a greater than 10% stockholder equal to the profits realized by such stockholder on the sale of the Company’s stock that was purchased and sold by such stockholder within six months of such sale. Under Section 16(b) of the Securities Exchange Act of 1934, as amended, the profit realized from this transaction by the greater than 10% stockholder was required to be disgorged to the Company. The Company recorded the proceeds received on this transaction of $148,109 as Additional paid in capital and is reflected on the Statements of Stockholders’ Equity and Comprehensive Income (Loss).
In May 2011 the Company issued 45,000 shares of common stock to an outside service provider as part of a consulting agreement.
As of September 30, 2011 , the Company had 38,933,607 shares of common stock and no shares of preferred stock outstanding. The Company has not declared or paid any dividends through September 30, 2011 .

NOTE 16. EQUITY PLANS AND SHARE-BASED COMPENSATION
Stock Option Plan: The Company’s 2005 Stock Option Plan, as amended (the “Stock Option Plan”) provides for the grant of incentive or non-statutory stock options to the Company’s employees, directors and consultants. Upon recommendation of the Board of Directors, the stockholders approved increases in the total shares of common stock reserved for issuance under the Stock Option Plan at various times from 1,000,000 to 3,700,000 currently.
Restricted Stock Plan: The Company’s 2008 Restricted Stock Plan, as amended (the “Restricted Stock Plan”) was adopted by the Board of Directors and was approved by the stockholders on July 1, 2008. The Restricted Stock Plan initially reserved up to 750,000 shares of the Company’s common stock for restricted stock awards and restricted stock units to eligible employees, directors and consultants of the Company. Upon recommendation of the Board of Directors, the stockholders approved an increase in the total shares of common stock reserved for issuance under the Restricted Stock Plan from 750,000 to 1,550,000 shares.
The Stock Option Plan and the Restricted Stock Plan are administered by the Compensation Committee of the Board of Directors, which determines the terms of the option and share awards, including the exercise price, expiration date, vesting schedule and number of shares. The term of any incentive stock option granted under the Stock Option Plan may not exceed ten years, or five years for options granted to an optionee owning more than 10% of the Company’s voting stock. The exercise price of an incentive stock option granted under the Option Plan must be equal to or greater than the fair market value of the shares of the Company’s common stock on the date the option is granted. An incentive stock option granted to an optionee owning more than 10% of the Company’s voting stock must have an exercise price equal to or greater than 110% of the fair market value of the Company’s common stock on the date the option is granted. The exercise price of a non-statutory option granted under the Option Plan must be equal to or greater than 85% of the fair market value of the shares of the Company’s common stock on the date the option is granted.

Grants Outside Existing Equity Plans: Prior to the adoption of the Restricted Stock Plan, the Board of Directors granted 40,000 restricted stock awards in connection with an executive employment agreement. In July 2009, the Board of Directors granted an inducement award (as defined in NASDAQ Rule 5635(c) (4)) made outside of the existing Stock Option Plan for 200,000 stock options.

Share Based Compensation: The Company measures share-based compensation cost at the grant date based on the fair value of the award and recognizes this cost as an expense over the grant recipients’ requisite service periods for all awards made to employees, officers, directors and consultants.
The share-based compensation expense recognized in the Condensed Statements of Operations for the three and nine

16

months ended September 30, 2011 and 2010 was as follows:  

 
 
For the three months ended September 30,
 
For the nine months ended September 30,
 
 
2011
 
2010
 
2011
 
2010
Share-based compensation cost included in:
 
 
 
 
 
 
 
 
Research and development
 
$
(566
)
 
$
202,844

 
$
226,476

 
$
428,285

Selling, general and administrative
 
178,790

 
407,099

 
1,053,040

 
1,724,632

Total share-based compensation cost
 
$
178,224

 
$
609,943

 
$
1,279,516

 
$
2,152,917


The following table presents share-based compensation expense by type of award for the three and nine months ended September 30, 2011 and 2010 :

 
 
For the three months ended September 30,
 
For the nine months ended September 30,
 
 
2011
 
2010
 
2011
 
2010
Type of Award:
 
 
 
 
 
 
 
 
Stock Options
 
$
3,968

 
$
336,156

 
$
633,930

 
$
929,491

Restricted Stock Units and Awards
 
174,256

 
273,787

 
645,586

 
1,223,426

Total share-based compensation cost
 
$
178,224

 
$
609,943

 
$
1,279,516

 
$
2,152,917


Stock Options: The Company recognized share-based compensation expense for stock options of approximately $634,000 (approximately $596,000 to officers, directors and employees, and approximately $38,000 to outside providers) for the nine months ended September 30, 2011 related to stock option awards ultimately expected to vest and reduced for estimated forfeitures. Included in this amount is approximately $236,000 in additional expense due to accelerated vesting, resulting from the severance agreement with the Company’s former CEO, Dr. Farhad Moghadam. The weighted average estimated fair value of employee stock options granted for the nine months ended September 30, 2011 and 2010 was $1.50 and $2.03 per share, respectively. Fair value was calculated using the Black-Scholes Model with the following assumptions:

 
 
For the nine months ended September 30,
 
 
2011
 
2010
Expected volatility
 
98
%
 
99
%
Risk free interest rate
 
2
%
 
2
%
Expected dividends
 
—

 
—

Expected life (in years)