Ascent Solar Technologies Inc

REPORT OF INDEPENDENT REGIST ERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of Ascent Solar Technologies, Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Ascent Solar Technologies, Inc.(the Company) as of December 31, 2023 and 2022, and the related statements of operations and comprehensive income, stockholders’ equity (deficit), and cash flows for each of the years in the two-year period ended December 31, 2023, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

Substantial Doubt about the Company’s Ability to Continue as a Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has had limited production which has led to the Company having a working capital deficit resulting in the Company being dependent on outside financing to fund its operations. There is no assurance that the Company will be able to raise additional capital and cash on hand is not sufficient to sustain operations. These factors raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Complex Financing Transactions

Description of the Matter:

The Company’s financing transactions include common stock and warrant issuances that require proper accounting for proceeds and transaction costs which include fair value estimates. Additionally, adjustments to note and warrant terms resulted in deemed dividends for the down round provision, which is based on a fair value estimate. The financing transactions are discussed in Note 10 and Note 14 to the financial statements.

How We Addressed the Matter in Our Audit:

Our audit procedures related to the following:

•

Inspected and reviewed debt agreements, warrant agreements, conversion notices, and settlement agreements to evaluate the Company’s accounting classification for these transactions, including assessing and evaluating management’s application of relevant accounting standards to such transactions.

•

We evaluated the reasonableness and appropriateness of the choice of valuation model used for each specific transaction.

•

We tested the reasonableness of the assumptions used by the Company in the Black Scholes models, including exercise price, term, expected volatility, and risk-free interest rate.

•

We tested the accuracy and completeness of data used by the Company in developing the assumptions used in the valuation models.

•

We evaluated the accuracy and completeness of the Company’s presentation of these instruments in the financial statements and related disclosures in Note 10, and 14, including evaluating whether such disclosures were in accordance with relevant accounting standards.

Impairment of Assets Acquired

Description of the Matter:

As discussed in Notes 2,and 5 to financial statements, the Company acquired manufacturing assets and inventory located in Switzerland, during the year-ended December 31, 2023, in an effort to expand operations. At year-end, operations had deteriorated to a point where management determined it necessary to perform an evaluation of these assets for impairment, concluding that certain assets were impaired. The Company recognized a $3.3 million impairment charge, which is the amount by which the carrying value exceeded the estimated fair value of these assets. The Company entered into a letter agreement with a former affiliate of the Company that, among other things, granted the Company the option to resell the acquired assets to the former affiliate for $5 million. The Company exercised its option to resell the assets but has not received payment on this option and, due to deteriorating conditions with this affiliate, payment is uncertain.

How We Addressed the Matter in Our Audit:

Auditing the Company’s impairment measurement involved a high degree of judgment as estimates underlying the determination of fair value of the long-lived assets were based on assumptions affected by current market and economic conditions. To determine the fair value of the long-lived asset group, the Company utilized a cost and market approach, measuring fair value on the standalone basis value premise. Management used these data inputs to perform an undiscounted cash flow analysis.

Our audit procedures related to the following:

•

Testing managements process for developing the fair value estimate.

•

Evaluating the appropriateness of the discounted cash flow model used by management.

•

Testing the completeness and accuracy of underlying data used in the fair value estimate.

/s/ Haynie & Company

Haynie & Company

Salt Lake City, Utah

February 21, 2024

We have served as the Company’s auditor since 2017.