Ascent Solar Technologies, Inc. (OTCMKTS:ASTID) Crashes After Reverse Split

After the end of the June 1 trading session Ascent Solar Technologies, Inc (OTCMKTS:ASTI) issued a press release announcing a 1-for-20 reverse split of their common stock. The effects of the split became effective on the very next day and as a result the company’s share price jumped from a close at $0.0245 on June 1 to a opening price of nearly 60 cents on June 2.

According to the PR immediately following the split ASTI were left with approximately 17 million outstanding shares but the authorized shares have remained the same at 450 million shares. The number of the outstanding shares of the company’s various series of preferred shares wasn’t affected by the split but at least the terms on which they can be turned into common shares were adjusted proportionally to the split.

To say that investors reacted negatively to the news would be an understatement. On June 2 ASTI crashed by over 18% and dropped to 40 cents per share on a volume of 250 thousand shares. Friday’s session, however, turned out to be an even bigger disaster. The stock began sinking right from the get-go and by the time of the closing bell it had managed to slash almost 30% of its value, closing at $0.281. This time a lot more shares got dumped on the market – the traded volume for the day reached 1.33 million shares.

The thing that prompted ASTI to resort to a reverse split may have been the severe dilution of the common stock that has been going on since last year. In our articles we have been warning you about the massive amount of shares being issued by the company –  at the start of 2015 ASTI had around 18 million outstanding shares while right before last week’s reverse split they apparently had 340 million outstanding shares. With the authorized shares still standing at 450 million there is now plenty of room for the issuance of new fresh shares.

The grim financial state of the company may very well force it to take on even more convertible debt. For the quarter ended March 31, 2016, ASTI reported a 40% reduction in their net loss and an 8% increase in their revenues but this was simply not enough. The balance sheet continues to inspire little confidence:

• $350 thousand cash
• $9.7 million total current assets
• $15.1 million total current liabilities
• $710 thousand revenues
• $10.5 million net loss

Even with the $2 million raised at the end of April through the sale of series G preferred shares it should be obvious that if the revenues don’t suddenly show a significant grow ASTI will have to look for outside sources of funds once more.

The risks surrounding the stock shouldn’t be overlooked. Take into account all of the red flags and adjust your trades accordingly.