To say Ascent Solar Technologies Inc (OTCMKTS: ASTI) has been a disappointing investment is the understatement of the year. This one-time NASDAQ darling has seen a precipitous fall from grace. However, things might be changing as the stock has started climbing off all-time lows. Some desperately needed restructuring is finally taking place and ASTI is finally showing signs of coming off life support. Taking a closer look, we see if this comeback has legs.
First up, here’s a little background info for those that aren’t familiar with ASTI. Ascent Solar Technologies, Inc., an ISO 9001-2015 certified company, is a developer of thin-film photovoltaic modules using flexible substrate materials that are more versatile and rugged than traditional solar panels. Ascent Solar modules were named as one of the top 100 technologies in both 2010 and 2015 by R&D Magazine, and one of TIME Magazine’s 50 best inventions for 2011. The technology described above represents the cutting edge of flexible power and can be directly integrated into consumer products and off-grid applications, as well as other aerospace applications. Ascent Solar is headquartered in Thornton, Colorado, where the company’s quality management system has achieved ISO 9001:2015 certification.
ASTI is selling its Thornton, Colorado manufacturing facility for a sales price of $13M. The sale of the Building is expected to close in the early part of the 2019 third quarter.
The Building, at approximately 139K square feet, was acquired back in 2007 with a planned production capacity of 30MW of PV to compete in the large scale utility power generation and rooftop PV application markets that are no longer a valid business model to the Company. The facility was never fully utilized and the Company had been operating in the oversized facility with higher than necessary operating costs. Given the strong real estate market and as part of the Company’s plan to further streamline its existing PV operation to solely focus on developing the Tier-1 high-value PV markets, especially in the space and near space, drones and UAVs and defense markets, Company management determined that it was in the best interest of the Company and its shareholders to dispose of the Building on attractive terms and to reduce the Company’s debt and operating costs. Post-closing, the Company will lease a facility of approximately 25K square feet to continue its current operations and development efforts in the low volume but high-value PV markets.
The Company will utilize the sales proceeds, net of brokers’ commissions and other transaction expenses, to pay off (i) the existing mortgage loan on the Building ($5.7M), (ii) approximately $3.3M debt secured by a second lien on the Building, (iii) and to partially pay off the approximately $5.5M debt secured by a third lien on the Building. For the first full year, the Company expects a savings of over $1M in interest expense and approximately $200K in depreciation expense.
Currently trading with a market cap of $572k, ASTI has been a money-losing venture for years. Finally, CEO Victor Lee has unloaded the company’s facility, which was too big and never fully-utilized. If the company can refocus and become a nimbler operation, there is still hope for the company. While the company is far from profitable, it now has one less expense to worry about. If CEO Victor Lee can turn things around and make ASTI finally profitable, then we believe that ASTI represents a possible good risk-reward play at current levels. Time will tell and we will be watching.
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Disclosure: We have no position in ASTI and have not been compensated for this article. We have previously been compensated a fee of seven thousand five hundred usd regarding ASTI by a non-affiliated third party, Upstate Webwriters, Inc. This agreement has since expired.