Although some retail investors are feeling the burn from a tumultuous year in Ascent Solar stock, others believe that a buying opportunity is clearly at hand. Despite a history of convertible debenture financing and a sometimes fickle solar market, Ascent Solar Technologies Inc (OTC:ASTI) investors may finally be positioned to emerge as both near and long-term winners, with ASTI intent to capitalize on its ambitious and strategic plan to create shareholder value in a market that is in need of the company's technologically advanced solar products.
In the interview below, ASTI management told CNA Finance exactly how it's company lost market cap value, and what it plans to do to recapture it's solar glory, laying out a strategic vision and path toward what ASTI management believes will lead to substantial, near-term opportunities for the company.
CNA Finance: Ascent Solar is a prime example where investors can get fooled into thinking that a company's share price is an accurate measure of a company's inherent value. However, while that may not be the case from an objective valuation measure, the share price is indeed a factor that investors rely on to represent perceived fair value. Before we get into the massive transformation that is taking place at Ascent Solar, briefly discuss what exactly happened to cause the share price to reach these historically low levels?
Ascent Solar (ASTI):: Just like any commodity and/or foreign currency, a stock price is simply a function of the law of demand and supply, which is a complex function of multiple factors that include both fundamental valuation and non-fundamental reasons. These non-fundamental factors broadly include public news or rumors, investors' expectation (driven by greed or fear), and momentum driven by short-term traders, just to name a few.
From a fundamental perspective, Ascent's stock price has been severely affected by the challenges faced by the industry which witnessed a sharp decline in the average selling price of the incumbent crystalline silicon-based (c-Si) solar cell, from as high as $6/W a decade ago to less than $0.50/W today, resulting from technological and efficiency improvements as well as a huge influx of dumping, predominantly by Asian countries. These factors have forced many of the so-called "2nd generation thin-film solar technology" startup companies, established in the last decade, to go bankrupt, stop operations, or be acquired at a tiny fraction of the sunk-in capital. The most notable being: the high-profile 2011 bankruptcy filed by privately held Solyndra, LLC., who received $535 million in federal loan guarantees; the bankruptcy of publicly traded Energy Conversion Devices (ENER), also known as Uni-Solar in February 2012; and SoloPower Systems, who have repeatedly defaulted on the DOE guaranteed loan from the State of Oregon.
While it is a reality that Ascent's stock price has hit a historical low, we hope that current and potential shareholders recognize and appreciate that Ascent Solar has and can survive the "perfect storm." Our unique proprietary technology and manufacturing process allowed Ascent to pivot our strategy and business model to focus on the high-value specialty PV markets not attainable by the rigid and fragile c-Si PV panels. Our undisputed leadership in the lightweight and flexible PV world is underscored by the numerous awards given by world-renowned institutions, such as: The 100 Most Innovative Technologies by R&D 100 Magazine in 2010: The 50 Best Inventions in the World by Time Magazine in 2011: and again, The 100 Most Innovative Products in the IT/Electronics Categories by R&D 100 Magazine in 2015. That no other solar cell manufacturers have won any award like these, let alone three, speaks to the state-of-the-art technology and products we have developed.
On the other hand, the delisting from NASDAQ (due to not maintaining the strict minimum $1 bid-price requirement) has excluded many interested and would be institutional investors who must work within certain investment framework/criteria, as well as other would-be investors that were rejected by many security firms because they would not accept buy orders for OTC stocks. This has directly cut off a huge portion of the demand side of the equation!
CNA: Okay, that's a fair response, and most informed investors understand that emerging companies are almost always at the mercy of what some may call "aggressive financiers." There is little argument that the benefit of being a publicly traded company and having the ability to tap the equity markets for financing ultimately pays its dividends. With that said, Ascent Solar appears positioned to capitalize on a business strategy intended to maximize asset and shareholder value. For investors considering taking a stock position today, what can they expect ASTI will do to drive shareholder value and to advance the company's commercialization strategy?
ASTI: I trust that investors have taken notice of the many positive developments Ascent has announced, such as: being selected by the Japan Aerospace Exploration Agency (JAXA) for further evaluation of our superlight CIGS solar cell for deep space mission, the first ever large contract awarded (and partially shipped) for high-altitude application; participation in the US Special Operations Command (SOCOM) exclusive invitation-only Technical Experimentation (TE- 17-3) Event held on July 17-19, 2017; and most recently the selection by PowerKeep to develop and supply solar panels for the Energizer® PowerKeep Line of solar products. All these achievements are by no means a fluke, given the credentials of the parties with whom we are working. In addition, we achieved ISO 9001:2015 certification earlier this year, which is a pre-requisite in many of the high-value PV markets that we are pursuing. These are the markets with extremely high entry barriers and with primary purchasing considerations driven more by the reliability, durability, and practical functionality of the product, as opposed to a pure cost factor in the traditional PV market, which caters to utility projects or rooftop applications.
I firmly believe that Ascent Solar, after years of R&D and development effort in these highly specialized, but lucrative markets, is well positioned to be a dominant player, and create shareholder value, as these markets begin to grow exponentially.
CNA: Many investors may not even realize that Ascent Solar is a pioneer in the solar industry, commercializing solar technology that has been researched and developed during the past two decades. We will get more in-depth in a moment, but can you describe in simplest terms the competitive edge that Ascent Solar enjoys particular to CIGS flexible technology?
ASTI: Copper indium gallium (di)selenide, otherwise known as CIGS, is a thin film technology that holds several advantages over standard monocrystalline solar cells. While monocrystalline technology can be thick, heavy, rigid, and fragile, our CIGS solar technology is thin, flexible, lightweight, and most importantly, shatterproof. Ascent Solar holds several key patents that allow our CIGS technology to be produced on a polyimide (plastic) backing. This polyimide backing allows us to monolithically integrate our solar cells, through a laser pattering process, to each adjacent cell surrounding it, allowing electrical current to flow around any unexpected damage to the panel. As an example, if one of our solar panels were punctured or cut, the electrical current would flow around the damaged area and to the terminal location. Most other thin-film and monocrystalline panels are not monolithically integrated, meaning that if one cell of the panel is damaged, the whole device can be rendered useless. This revolutionary technology allows us to take our solar to more remote locations and extreme environments.
CNA: So, for investors to get a grasp of exactly how important and revolutionary this CIGS product may become to multiple industries, can you speak to the potential market applications to various sectors. Also, from a commercialization perspective, are there specific markets that ASTI expects will become hundred billion dollars, or higher, market opportunities?
ASTI: Yes, I'm glad you brought that up. While many solar companies continue to focus on utilities, building applied PV (BAPV), and rooftop applications, we understand that market is becoming highly saturated, driving down the price of solar. We fully appreciate there are specific markets that will pay a higher $/watt for this innovative technology since our solar can operate in the most extreme environments. The military, government, public sector, and disaster relief markets have been a large focus for ASTI based on the fact that these markets look for dependable solar that withstands wear and tear over extended periods of time. Batteries and other forms of power are the 3rd heaviest item a soldier will carry on their pack in deployed scenarios, just behind water and oil. The government and military are looking for lightweight and rugged solutions to recharge equipment on the go. This is where we come in; we can provide some of the lightest and most flexible solar for man-portable scenarios, that can withstand the rugged usage that most soldiers will put their equipment through. In addition, we have identified disaster relief as a tremendous opportunity for our solar technology. With the disasters that have hit our shores in the past month, being able to bring portable power to the end user is critical. Whether it is working with non-government organizations, the private sector, or the end consumer, we know that our products in the hands of these disaster victims can be life-saving.
Another market that is a high priority for the company is the aerospace sector which includes drones, high-altitude aircraft, and spacecraft. Not only is this a high-revenue market, but our solar technology makes us a perfect fit for these opportunities. Concerning our technology, CIGS has higher performance in low-light conditions than other solar technologies. This essentially means that our solar will have elevated levels of output even when further away from the sun. We have already partnered with organizations like JAXA to provide solar for their deep space missions and have become a prime candidate for several other opportunities in the space sector.
In addition to spacecraft, our thin-film CIGS gives us the ability to integrate our solar directly into the wings of drones, UAV's and aircraft without adding bulk to the vehicle. This offers an attractive trade-off over additional batteries built into the aircraft, which can add significant weight to the unit. Finally, we can provide engineering services and assistance for electrical interface systems and custom PV integration, so if you have a custom product you need a solution for, we will work with you all the way from conceptualization to finished product.
The final market we've placed a large focus on is the Consumer/OEM space, where there is large revenue potential for co-branding power solutions for the consumer electronics space. But we'll cover that in a later question.
CNA: You mentioned the military applications a moment ago. Actually, in 2015, R&D Magazine selected Ascent Solar's innovative Military Graded foldable PV Blanket as a Top 100 Technology in the IT/Electronics Category. What applications did that publication find most appealing to warrant the recognition?
ASTI: Our MilPak™ 60E was the first demonstration of a fully self-contained portable PV power system. The unit consists of a 60W folding PV blanket for power generation, a junction box that contains a dynamic maximum peak power tracking circuitry (MPPT), a charge controller for the lithium battery system, a lithium battery (84 Whr) with battery management system, a high-power (55W) power regulation circuit for selected 19V to 28V DC voltage, and two USB charging circuits. So essentially you could deploy the MilPak, charge it from the sun, and use the built-in battery to charge a wide variety of devices wherever your mission took you. Furthermore, the connectors and ports were designed to be with an IP-67 rating, or better, for moisture and dust ingress. This product was a prime example of our design capabilities, which was further demonstrated by our ability to pass testing under the MIL STD 810G guidelines, and thus became a product that helped open doors for several contacts in the military and government space.
CNA: Also, it's important to point out that most publicly traded stocks, at any price level, do not get recognition from Time Magazine, which ASTI received in 2011. Time Magazine recognized your company as a Top 50 Best Invention for that year. Apparently, industry experts are impressed by what your business is doing. Fast forward six years later, is 2017-2018 potentially the break-out year for ASTI?
ASTI: We firmly believe that we're setting ourselves up for long-term success. Are we confident about our ongoing partnerships and contracts and partnerships that we are negotiating? Yes, very much so. We're very excited about 2017-2018, where we will continue to share more exciting news that has been in the works. But to your question, yes, we are building a strong foundation and are hopeful that 2018 will be a promising year for Ascent Solar to take off.
CNA: Again, investors may look at the current share price and not even consider the fact that ASTI has invested over $300 million in R&D, engineering, and manufacturing equipment. That amount of R&D is significant. What can the company show investors as proof that their investment patience will be worth the wait, and even more important that the current share price fails to recognize particular asset components of ASTI?
ASTI: First of all, we own a manufacturing facility in Thornton, Colorado that is worth about $11 million, if not more, based on comparative market indications. This is carried on our balance sheet at net book value of about $4 million. Secondly, Ascent Solar maintains an IP portfolio of over 40 patents (granted, allowed, and filed) relating to our world award-winning technology and unique manufacturing process. This IP portfolio is a direct result of several hundred million dollars of R&D and engineering work, which were not able to be capitalized and, therefore, are not reflected on our balance sheet. Put simply, with due respect to any ambitious corporation, they would have to invest the same amount of money, if not more, and probably a decade of development work to get to where we are today; let alone having to avoid infringing on our IP. The specialty markets that we are focusing on have extremely long sales cycles that I hope investors can understand and, most importantly, appreciate the fact that a breakthrough would bring about potentially huge and lucrative contracts that would not be easily unseeded by competitors.
CNA: So, you mentioned patents, which serve to fortify and protect market advantages. What are some of the essential patents that may help to keep competitors at bay? And, since many competitors are precluded from using your innovative product designs and features, is ASTI willing to enter into strategic partnerships or licensing deals to monetize certain assets?
ASTI: Several of our unique patents are on the ability to produce our CIGS on a polyimide (plastic) backing. This leaves every other CIGS manufacturer to build their solar on a glass or metal support, both which have their disadvantages. Glass construction can be rigid, more fragile, and far heavier than our product. Products using a metal backing may be lighter and more flexible than glass, but they do not allow for monolithic integration; the process that allows our panels to be some of the most durable solar panels on the market.
Several of our other patent filings involve other key aspects of the manufacturing process, which must remain confidential. However, I can assure you we are not worried about those methods or processes being imitated or copied.
With this proprietary technology, it allows a tremendous opportunity for unique partnerships with companies that value our niche technology. As mentioned earlier, we just entered into a partnership with PowerKeep to develop and supply solar panels for the Energizer® PowerKeep line of solar products. We hope this partnership not only brings us financial success but also opens the door for future licensing and OEM opportunities.
CNA: I read that ASTI is recognized as the "one and only" solar manufacturer in the world that is commercially producing monolithically integrated, flexible, CIGS products on a plastic substrate, which can offer significant and global opportunity. How do you envision capitalizing upon this unique leadership position?
ASTI: It's always been a high priority to get solar in the hands of the right end-users. As mentioned in a previous question, we are targeting a particular group of markets that will value our highly-innovative solar technology. These large revenue markets, unfortunately, carry longer sales cycles. We have been working diligently with several partners and customers to bring these concepts to fruition. Once these projects begin to be completed, we will start to see a "snowball effect" of orders where we can point to several examples of success in each market, which will, in turn, build trust and bring in more opportunities.
CNA: Most investors and consumers still have a misconception about how solar panels work. ASTI is revolutionizing the market in significant ways. Can you tell investors what sets Ascent Solar apart from others in the industry?
We are the only company that can produce thin-film solar, on a plastic backing, with monolithic integration. The rigid panels you might see on a rooftop can be heavy, rigid, and fragile, and if damaged, will cease to operate. Our thin-film CIGS carry significant weight savings and are more flexible than standard solar technology. This allows us to apply our solar to places where another solar can't go, such as curved surfaces, locations with low-light performance, and areas with extreme temperature fluctuation. Finally, the ability to build our solar on a polyimide backing allows us to monolithically integrate our solar cells, making it some of the most durable solar on the planet.
CNA: So, taking advantage of these exclusive benefits, commercialization opportunities may be substantial in the aerospace, outer-space, military defense and, even the drone industries. Is ASTI prepared to target those markets?
ASTI: Definitely, our unique technology makes us the perfect fit for markets that place a high emphasis on weight and durability. As discussed earlier, all of these markets are willing to pay a premium for, frankly, a better engineered solar cell than most others on the market. Success in these markets will help open the door for future opportunities.
CNA: Two emerging sectors that many investors have still not embraced in investment terms are the drone and solar transportation markets. Both of these markets will develop into significant multi-billion dollar opportunities. Are there specific areas that ASTI can immediately target to maximize its competitive footprint, and at the same time solidify long-term relationships with major manufacturers in those sectors?
ASTI: Yes, we already have a partnership with Silent Falcon, an unmanned aerial system (UAS) manufacturer here in the US. The ability for us to seamlessly integrate solar into the wing of their airship added minimal impact upon weight and aerodynamics and added 30-50% more flight time to their missions without additional batteries. The Silent Falcon partnership has already opened many other doors for business in the drone and transportation space, as we have shown to be a competent and reliable partner for creating innovative solutions to several industries' power needs.
CNA: Insightful investors understand that solar related opportunities in the military, drone, and transportation industries are enormous. However, the consumer products market is also in its infancy. How well is ASTI positioned to take advantage of that multi-billion dollar market and what type of solar products will you target to consumers?
ASTI: Ascent Solar is very familiar with the user space, as evidenced by our previous brand, EnerPlex. The fact of the matter is that the demand for news, imagery, video, social media and more at our fingertips far outweighs what most portable electronics can provide regarding battery capacity. Simply put, our batteries on our smartphones, tablets, action cameras, and drones, for the most part, cannot last through a full day without being recharged. With this need for power, the portable battery market has exploded; however, we still believe there is a high demand for portable solar in this space. Unlike portable batteries, solar provides you an infinite supply of power without sacrificing weight or size. Our recent partnership with PowerKeep, to develop and provide solar panels for the Energizer® PowerKeep Line of solar products, is evidence that others feel the same way. It's our goal to find a wide variety of partners that want to integrate our solar into their consumer devices. These could be backpacks, portable solar chargers, or whatever else our future partners want to collaborate on and create with us. The consumer electronics market is valued at almost $7 billion, so there is a high emphasis for us to be a part of this space.
CNA: Finally, assuming that ASTI's strategic initiatives gain the market traction that you expect, where can you envision ASTI to be positioned in the next five years?
ASTI: While concentrating on our desired specialty markets, we continue to place a strong focus on our R&D process and manufacturing plant. It is a continual goal to increase our solar efficiency, lower our build costs, and increase yield and volume. As we take stronger holds in our previously described markets, we will continue to branch out into other high-revenue markets where clean and portable power is desired. So in 5 years' time, I hope we can fulfill our Corporate Vision Statement. To deliver clean and innovative power solutions for everyone everywhere.
Closing Thoughts:
Although ASTI is trading at incredibly low levels, an opportunity for near-term value appreciation is substantial. Keeping in mind the current level of outstanding shares at ASTI, investors should remain realistic about near-term price levels, but at the same recognizing that increases of significant percentages may be in order. With ASTI management laying out a plan and addressing investor concerns, shareholders interested in the stock have a palate of data to appreciate. Although no investment comes without risk, the current price level and market position at ASTI leads many investors to believe that the worst of days are now well behind the company. Perhaps it is time for investors to pay attention to what ASTI has to say and to take advantage of an apparent investment opportunity.