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SEC Comment Letter for Ascent Solar Technologies, Inc. (ASTI) (CIK 0001350102) (ASTI) — Jul 10, 2006

Ascent Solar Technologies, Inc. (ASTI) (CIK 0001350102)
Date: July 10, 2006 · CIK: 0001350102 · Accession: 0000000000-06-031750

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Summary

Reasoning

File numbers found in text: 333-131216

Referenced dates: May 19, 2006

Date
June 8, 2006
Author
Mark P. Shuman
Form
UPLOAD
Company
Ascent Solar Technologies, Inc. (ASTI) (CIK 0001350102)

Letter

Mail Stop 4561 June 8, 2006 Matthew Foster Ascent Solar Technologies, Inc. 8120 Shaffer Parkway Littleton, CO 80127

RE: Ascent Solar Technologies, Inc. Registration Statement on Form SB-2/A File No. 333-131216 Amendment Filed on May 26, 2006

Dear Mr. Foster:

We have reviewed your filing and have the following comments. Where indicated, we think you should revise your doc ument in response to these comments. General 1. Please provide the disclosu re required by Item 502(b) of Regulation S-B. Risk Factors, page 5 “We will have broad discretion in using the proceeds from this offering”, page 12 2. We note the disclosure in the narrative. Please be advised that you may change the use of proceeds provided such reservation is due to certain contingencies that are specifically discussed and the alternativ es to such use are indicated. Refer to Instruction 7 to Item 504 of Regulation S-K for guidance. Revise your disclosure accordingly. Options Exercises and Holdings, page 43 3. We note that in lieu of using the mid-poi nt of your offering price range, you used the fair market value that you used for accounting purposes. Please identify the persons who determined this per share value and describe the methodology used

Matthew Foster Ascent Solar Technologies, Inc. June 8, 2006 Page - 2 -

to calculate the value of each share in reas onable detail. This reasonably detailed methodology should be provided with respec t to each date for which the share price values are used in computing the option values. Alternatively, we suggest that you use the mid-point of the offeri ng price range in computing the option values presented in the option grant and option year-end value tables. Using the mid-point of the offering price in computing these columns will provide information that is informative to invest ors, as they will more readily understand the impact of the offering on the holders of the options. 4. In responding to the foregoing comment, if you elect to use prices other than the mid-point of the offering price range, not e that the information concerning how you determined the prices used will be required for the share valued on each option grant date and for the share value at the at the end of the most recent fiscal year. In particular, the table on page 43 should be amended to use a share valued determined as of December 31, 2005, rather than “the date the options were granted”, unless you use the mid-point of the offering price range.

Related Party Transactions, page 46 5. Please disclose your response to comme nt 16 of our letter dated May 19, 2006.

Shares Eligible for Future Sale, page 53 6. Please expand the paragraph under the h eading “Bridge Rights” to state the transaction that the referenced regist ration statement woul d register, which appears to be the resale of those units.

Critical Accounting Policies

Stock Based Compensation, page 22 7. Please refer to our prior comment 9 of our letter dated May 19, 2006. We have reviewed your response a nd note that you believe that the $3.00 conversion price of your bridge loan issued on January 18, 2006 did not include a beneficial conversion feature. However, it is not clear from your response why you believe a beneficial conversion feature is not in cluded in the conversion price other than the large spread between the 10% interest rates and the 7% prime rate. In this regard, it appears that as a result of the amount allocate d to the bridge loan and the bridge rights, based on the relative fa ir value of each, the effective conversion price would be approximately $1.50 per shar e and as a result, the conversion price does not appear to provide support for your conclusion that the fair value of the common stock at that time was $3.00. Refe r to Issue 1 of EITF 00-27. As a result, tell us how you considered the valu ation approaches noted in Chapter 6 of the AICPA Practice Aid “Valuation of Pr ivately-Held-Company Equity Securities Issued as Compensation” in determining fair value of your common stock. Also,

Matthew Foster Ascent Solar Technologies, Inc. June 8, 2006 Page - 3 -

when you have determined the fair valu e of the Company’s common stock at the time of the bridge financing based on this guidance, then reconcile such value to the mid-point of the IPO price range of $5.50 as the bridge financing occurred within 5-days of the Company filing your Form SB-2. 8. Based on your response to the previous co mment, we believe that your Critical Accounting Policies and Estimates disc ussion of stock based compensation should be significantly enhanced to include a discussion of the specific valuation methods used to determine the fair value of the Company’s common stock on November 2, 2005, November 18, 2005, January 18, 2006 and January 27, 2006 – through the date of your response. 9. Please refer to our prior comments 10 and 11 of our letter dated May 19, 2006. We note in your response that warrants normally begin trading at about 20% of the price of a share of common stock and that based on an informal survey of initial public offerings where similar “units” are offered, the warrants, once the unit is broken up, would trade at $0.50 a nd $0.75 per warrant. It remains unclear how you determined that the trading price of other companies’ warrants and this informal survey supports your assessed fair value of your common stock. Similar to the previous comment, tell us how you considered the valuation approaches noted in Chapter 6 of the AICPA Prac tice Aid “Valuation of Privately-Held- Company Equity Securities Issued as Comp ensation” in determining fair value of your common stock. If a true market approach was used to fair value the warrants, then tell us the specific factors that were used in selecting the comparable companies and tell us which companies were used in your survey and how you determined the fair value of your warrants based on this information. 10. You also indicate that there is a very “remote possibility” that the holders will never be able to exercise the warrants and will never receive shares or payment of cash in settlement of the warrants. You a ppear to attribute this statement to the fact that Paulson Investme nt Company has never underwri tten offerings in which the warrant holders were unsuccessful in ex ercising their warrants. It is not clear how the underwriters would factor into the warrant holders ability to exercise the warrants. The fact remains that the Company will be required to timely file updates to its registration statement and deliver a curren t prospectus at the time such warrants are exercised and therefor e, it appears that the warrant holders ability to successfully exercise their wa rrants is based on your ability to timely file. You have previously indicated if th e Company is not current in their filings and therefore cannot deliver sh ares that comply with th e Securities law, then you will not be obligated to honor the warran t holders request to exercise. Please explain and tell us how you factored th e Company’s responsi bilities in supporting the valuation of your warrants.

Matthew Foster Ascent Solar Technologies, Inc. June 8, 2006 Page - 4 -

* * * *

As appropriate, please amend your regist ration statement in response to these comments. You may wish to provide us with marked copies of the amendment to expedite our review. Please furnish a cove r letter with your amendment that keys your responses to our comments and provides any requested supplemental information. Detailed cover letters greatly facilitate our review. Please understa nd that we may have additional comments after reviewing your amendment and responses to our comments.

You may contact at Patrick Gilmore at (202) 551-3406 if you have questions regarding comments on the fina ncial statements and relate d matters. Questions on other disclosure issues may be directed to Jay I ngram at (202) 551-3397. If you require further assistance, please contact me at (202) 551-3462, or the Assistant Director, Barbara C. Jacobs at (202) 551-3735.

Sincerely,
Mark P. Shuman
Branch Chief

Show Raw Text
Mail Stop 4561

       June 8, 2006

Matthew Foster
Ascent Solar Technologies, Inc.
8120 Shaffer Parkway
Littleton, CO 80127

  RE: Ascent Solar Technologies, Inc.
   Registration Statement on Form SB-2/A
   File No. 333-131216
   Amendment Filed on May 26, 2006

Dear Mr. Foster:

We have reviewed your filing and have the following comments.  Where
indicated, we think you should revise your doc ument in response to these comments.
General
1. Please provide the disclosu re required by Item 502(b) of Regulation S-B.
Risk Factors, page 5
“We will have broad discretion in using the proceeds from this offering”, page 12
2. We note the disclosure in the narrative.  Please be advised that you may change
the use of proceeds provided such reservation is due to certain contingencies that
are specifically discussed and the alternativ es to such use are indicated.  Refer to
Instruction 7 to Item 504 of  Regulation S-K for guidance.  Revise your disclosure
accordingly.
Options Exercises and Holdings, page 43
3. We note that in lieu of using the mid-poi nt of your offering price range, you used
the fair market value that you used for accounting purposes.  Please identify the persons who determined this per share value and describe the methodology used

Matthew Foster
Ascent Solar Technologies, Inc. June 8, 2006 Page - 2 -

to calculate the value of each share in reas onable detail.   This reasonably detailed
methodology should be provided with respec t to each date for which the share
price values are used in computing the option values.  Alternatively, we suggest
that you use the mid-point of the offeri ng price range in computing the option
values presented in the option grant and option year-end value tables.  Using the
mid-point of the offering price in computing these columns will provide information that is informative to invest ors, as they will more readily understand
the impact of the offering on the holders of the options.
4. In responding to the foregoing comment, if you elect to use prices other than the
mid-point of the offering price range, not e that the information concerning how
you determined the prices used will be required for the share valued on each option grant date and for the share value at the at the end of the most recent fiscal
year.  In particular, the table on page 43 should be amended to use a share valued
determined as of December 31, 2005, rather than “the date the options were granted”, unless you use the mid-point of the offering price range.

Related Party Transactions, page 46
5. Please disclose your response to comme nt 16 of our letter dated May 19, 2006.

Shares Eligible for Future Sale, page 53
6. Please expand the paragraph under the h eading “Bridge Rights” to state the
transaction that the referenced regist ration statement woul d register, which
appears to be the resale of those units.

Critical Accounting Policies

Stock Based Compensation, page 22
7. Please refer to our prior comment 9 of our letter dated May 19, 2006.  We have
reviewed your response a nd note that you believe that  the $3.00 conversion price
of your bridge loan issued on January 18, 2006 did not include a beneficial conversion feature.  However, it is not  clear from your response why you believe
a beneficial conversion feature is not in cluded in the conversion price other than
the large spread between the 10% interest rates and the 7% prime rate.  In this regard, it appears that as a result of the amount allocate d to the bridge loan and
the bridge rights, based on the relative fa ir value of each, the effective conversion
price would be approximately $1.50 per shar e and as a result, the conversion price
does not appear to provide support for your conclusion that the fair value of the common stock at that time was $3.00.  Refe r to Issue 1 of EITF 00-27.  As a
result, tell us how you considered the valu ation approaches noted in Chapter 6 of
the AICPA Practice Aid “Valuation of Pr ivately-Held-Company Equity Securities
Issued as Compensation” in determining fair value of your common stock.  Also,

Matthew Foster
Ascent Solar Technologies, Inc. June 8, 2006 Page - 3 -

when you have determined the fair valu e of the Company’s common stock at the
time of the bridge financing based on this guidance, then reconcile such value to
the mid-point of the IPO price range of  $5.50 as the bridge financing occurred
within 5-days of the Company filing your Form SB-2.
8. Based on your response to the previous co mment, we believe that your Critical
Accounting Policies and Estimates disc ussion of stock based compensation
should be significantly enhanced to include  a discussion of the specific valuation
methods used to determine the fair value of the Company’s common stock on
November 2, 2005, November 18, 2005, January 18, 2006 and January 27, 2006 – through the date of your response.
9. Please refer to our prior comments 10 and 11 of our letter dated May 19, 2006.
We note in your response that warrants normally begin trading at about 20% of
the price of a share of common stock and that based on an informal survey of initial public offerings where similar “units” are offered, the warrants, once the unit is broken up, would trade at $0.50 a nd $0.75 per warrant.  It remains unclear
how you determined that the trading price of other companies’ warrants and this
informal survey supports your assessed fair value of
your common stock.  Similar
to the previous comment, tell us how you considered the valuation approaches
noted in Chapter 6 of the AICPA Prac tice Aid “Valuation of  Privately-Held-
Company Equity Securities Issued as Comp ensation” in determining fair value of
your common stock.  If a true market approach was used to fair value the
warrants, then tell us the specific  factors that were used in selecting the
comparable companies and tell us which companies were used in your survey and how you determined the fair value of your warrants based on this information.
10. You also indicate that there is a very “remote possibility” that the holders will
never be able to exercise the warrants and will never receive shares or payment of
cash in settlement of the warrants.  You a ppear to attribute this statement to the
fact that Paulson Investme nt Company has never underwri tten offerings in which
the warrant holders were unsuccessful in ex ercising their warrants.  It is not clear
how the underwriters would factor into the warrant holders ability to exercise the
warrants.  The fact remains that the Company  will be required to timely file
updates to its registration statement and deliver a curren t prospectus at the time
such warrants are exercised and therefor e, it appears that the warrant holders
ability to successfully exercise their wa rrants is based on your ability to timely
file.  You have previously indicated if th e Company is not current in their filings
and therefore cannot deliver sh ares that comply with th e Securities law, then you
will not be obligated to honor the warran t holders request to exercise. Please
explain and tell us how you factored th e Company’s responsi bilities in supporting
the valuation of your warrants.

Matthew Foster
Ascent Solar Technologies, Inc. June 8, 2006 Page - 4 -

* * * *

As appropriate, please amend your regist ration statement in response to these
comments.  You may wish to provide us with marked copies of the amendment to
expedite our review.  Please furnish a cove r letter with your amendment that keys your
responses to our comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review.  Please understa nd that we may have
additional comments after reviewing your amendment and responses to our comments.

You may contact at Patrick Gilmore at  (202) 551-3406 if you have questions
regarding comments on the fina ncial statements and relate d matters. Questions on other
disclosure issues may be directed to Jay I ngram at (202) 551-3397.  If you require further
assistance, please contact me at (202) 551-3462, or the Assistant Director, Barbara C. Jacobs at (202) 551-3735.

Sincerely,

Mark P. Shuman
Branch Chief

cc. Mark A. von Bergen v ia telecopier
(503) 241-8014