ASPEN AEROGELS INC, 10-Q filed on 8/4/2017
Quarterly Report
Document and Entity Information
6 Months Ended
Jun. 30, 2017
Aug. 1, 2017
Document And Entity Information [Abstract]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Jun. 30, 2017 
 
Document Fiscal Year Focus
2017 
 
Document Fiscal Period Focus
Q2 
 
Trading Symbol
ASPN 
 
Entity Registrant Name
ASPEN AEROGELS INC 
 
Entity Central Index Key
0001145986 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
23,594,440 
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2017
Dec. 31, 2016
Current assets:
 
 
Cash and cash equivalents
$ 6,951 
$ 18,086 
Accounts receivable, net of allowances of $91 and $93
16,492 
17,535 
Inventories
13,255 
12,868 
Prepaid expenses and other current assets
1,343 
1,697 
Total current assets
38,041 
50,186 
Property, plant and equipment, net
80,523 
84,394 
Other long-term assets
94 
89 
Total assets
118,658 
134,669 
Current liabilities:
 
 
Accounts payable
8,408 
13,065 
Accrued expenses
4,751 
3,987 
Deferred revenue
806 
1,043 
Capital leases, current portion
12 
35 
Total current liabilities
13,977 
18,130 
Capital leases, excluding current portion
 
Deferred rent
1,335 
971 
Total liabilities
15,312 
19,105 
Commitments and contingencies (Note 6)
   
   
Stockholders’ equity:
 
 
Preferred stock, $0.00001 par value; 5,000,000 shares authorized, no shares issued and outstanding at June 30, 2017 and December 31, 2016
   
   
Common stock, $0.00001 par value; 125,000,000 shares authorized, 23,594,440 and 23,369,838 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively
Additional paid-in capital
535,720 
533,088 
Accumulated deficit
(432,374)
(417,524)
Total stockholders’ equity
103,346 
115,564 
Total liabilities and stockholders’ equity
$ 118,658 
$ 134,669 
Consolidated Balance Sheets (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Jun. 30, 2017
Dec. 31, 2016
Statement Of Financial Position [Abstract]
 
 
Allowance for doubtful accounts
$ 91 
$ 93 
Preferred stock, par value
$ 0.00001 
$ 0.00001 
Preferred stock, shares authorized
5,000,000 
5,000,000 
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value
$ 0.00001 
$ 0.00001 
Common stock, shares authorized
125,000,000 
125,000,000 
Common stock, shares issued
23,594,440 
23,369,838 
Common stock, shares outstanding
23,594,440 
23,369,838 
Consolidated Statements of Operations (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Revenue:
 
 
 
 
Product
$ 24,562 
$ 27,123 
$ 46,888 
$ 59,409 
Research services
507 
595 
1,183 
1,130 
Total revenue
25,069 
27,718 
48,071 
60,539 
Cost of revenue:
 
 
 
 
Product
21,121 
20,723 
41,591 
46,715 
Research services
254 
342 
565 
644 
Gross profit
3,694 
6,653 
5,915 
13,180 
Operating expenses:
 
 
 
 
Research and development
1,709 
1,286 
3,285 
2,596 
Sales and marketing
3,416 
2,821 
6,526 
5,883 
General and administrative
4,002 
3,894 
10,589 
7,807 
Total operating expenses
9,127 
8,001 
20,400 
16,286 
Loss from operations
(5,433)
(1,348)
(14,485)
(3,106)
Interest expense, net
(39)
(39)
(65)
(78)
Total interest expense, net
(39)
(39)
(65)
(78)
Net loss
$ (5,472)
$ (1,387)
$ (14,550)
$ (3,184)
Net loss per share:
 
 
 
 
Basic and diluted
$ (0.23)
$ (0.06)
$ (0.62)
$ (0.14)
Weighted-average common shares outstanding:
 
 
 
 
Basic and diluted
23,369,179 
23,111,127 
23,313,668 
23,087,299 
Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Cash flows from operating activities:
 
 
Net loss
$ (14,550)
$ (3,184)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
Depreciation and amortization
5,306 
4,826 
Stock-compensation expense
2,618 
2,803 
Lease incentives
(49)
 
Other
(1)
 
Changes in operating assets and liabilities:
 
 
Accounts receivable
1,518 
(4,110)
Inventories
(387)
(5,256)
Prepaid expenses and other assets
349 
(45)
Accounts payable
(1,272)
1,459 
Accrued expenses
813 
(1,475)
Deferred revenue
(237)
(232)
Deferred rent
(111)
 
Net cash used in operating activities
(6,003)
(5,214)
Cash flows from investing activities:
 
 
Capital expenditures
(4,831)
(7,728)
Net cash used in investing activities
(4,831)
(7,728)
Cash flows from financing activities:
 
 
Repayment of obligations under capital lease
(15)
(43)
Payments made for employee restricted stock tax withholdings
(286)
(82)
Net cash used in financing activities
(301)
(125)
Net decrease in cash
(11,135)
(13,067)
Cash at beginning of period
18,086 
32,804 
Cash at end of period
6,951 
19,737 
Supplemental disclosures of cash flow information:
 
 
Interest paid
89 
105 
Supplemental disclosures of non-cash activities:
 
 
Changes in accrued capital expenditures
(3,385)
(95)
Settlement of asset retirement obligation
 
$ 241 
Description of Business and Basis of Presentation
Description of Business and Basis of Presentation

(1) Description of Business and Basis of Presentation

Nature of Business

Aspen Aerogels, Inc. (the Company) is an aerogel technology company that designs, develops and manufactures innovative, high-performance aerogel insulation used primarily in the energy infrastructure and building materials markets. The Company also conducts research and development related to aerogel technology supported by funding from several agencies of the U.S. government and other institutions in the form of research and development contracts.

The Company maintains its corporate offices in Northborough, Massachusetts. The Company has three wholly owned subsidiaries: Aspen Aerogels Rhode Island, LLC, Aspen Aerogels Germany, GmbH and Aspen Aerogels Georgia, LLC.

Unaudited Interim Financial Information

The accompanying unaudited interim consolidated financial statements include the accounts of the Company and have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and disclosures normally included in the consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and accompanying notes in our Annual Report on Form 10-K for the year ended December 31, 2016 (the Annual Report), filed with the Securities and Exchange Commission on March 2, 2017.

In the opinion of the Company’s management, the unaudited interim consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments that are of a normal recurring nature and necessary for the fair statement of the Company’s financial position as of June 30, 2017 and the results of its operations for the three and six months ended June 30, 2017 and 2016 and the cash flows for the six month periods then ended.

The results of operations for the three and six months ended June 30, 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017 or any other period.

Significant Accounting Policies
Significant Accounting Policies

(2) Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements, which have been prepared in accordance with U.S. GAAP, include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the consolidated financial statements requires the Company to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include allowances for doubtful accounts, sales returns and allowances, product warranty costs, inventory valuation, the carrying amount of property and equipment, stock-based compensation and deferred income taxes. The Company evaluates its estimates and assumptions on an on-going basis using historical experience and other factors, including the current economic environment, which are believed to be reasonable under the circumstances. Management adjusts such estimates and assumptions when facts and circumstances dictate. Illiquid credit markets, volatile equity markets and declines in business investment increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods.

Cash and Cash Equivalents

Cash equivalents include short-term, highly liquid instruments, which consist of money market accounts. All cash and cash equivalents are maintained with major financial institutions in North America. Deposits with these financial institutions may exceed the amount of insurance provided on such deposits; however, these deposits typically may be redeemed upon demand and, therefore, bear minimal risk.

Revenue Recognition

The Company recognizes revenue from the sale of products and performance of research and development services. Revenue is recognized when all of the following criteria are met: persuasive evidence of an arrangement exists, the price to the buyer is fixed or determinable, delivery has occurred or services have been provided, and collectability is reasonably assured.

Product Revenue

Product revenue is recognized upon transfer of title and risk of loss, which is upon shipment or delivery. The Company’s customary shipping terms are free on board (FOB) shipping point.

The Company records deferred revenue for product sales when (i) the Company has delivered products but other revenue recognition criteria have not been satisfied or (ii) payments have been received in advance of products being delivered.

Research Services Revenue

The Company performs research services under contracts with various government agencies and other institutions. The Company records revenue earned on research services contracts using the percentage-of-completion method in two ways: (1) for firm-fixed-price contracts, the Company accrues that portion of the total contract price that is allocable, on the basis of the Company’s estimates of costs incurred to date to total contract costs; and (2) for cost-plus-fixed-fee contracts, the Company records revenue that is equal to total payroll cost incurred times a stated factor plus reimbursable expenses, to a stated upper limit. The primary cost under the Company’s research service contracts is the labor effort expended in completing research, and the only deliverable, other than the labor hours expended, is reporting of research results to the customer. Because the input measure of labor hours expended is also reflective of the output measure, it is a reliable means to measure the extent of progress towards completion. Revisions in cost estimates and fees during the course of the contract are reflected in the accounting period in which the facts that require the revisions become known. Contract costs and rates used to allocate overhead to contracts are subject to audit by the respective contracting government agency. Adjustments to revenue as a result of audit are recorded in the period they become known. To date, adjustments to revenue as a result of audit have been insignificant.

Stock-based Compensation

Stock-based compensation expense is measured at the grant date based on the fair value of the award. Expense is recognized on a straight-line basis over the requisite service period for all awards with service conditions. For performance-based awards, the grant date fair value is recognized as expense when the condition is probable of being achieved, and then on a graded basis over the requisite service period. The Company uses the Black-Scholes option-pricing model to determine the fair value of service-based option awards, which requires a number of complex and subjective assumptions including fair value of the underlying security, the expected volatility of the underlying security, a risk-free interest rate and the expected term of the option. The fair value of restricted stock and restricted stock unit (RSU) grants is determined using the closing trading price of the Company’s common stock on the date of grant. The fair value of awards containing market conditions is determined using a Monte Carlo simulation model based upon the terms of the conditions, the expected volatility of the underlying security, and other relevant factors.

During the six months ended June 30, 2017, the Company granted 86,023 shares of restricted common stock and non-qualified options (NSOs) to purchase 119,133 shares of common stock with a grant date fair value of $0.4 million and $0.2 million, respectively, vesting over a period of one year to its non-employee directors under the 2014 Employee, Director and Consultant Equity Incentive Plan (the 2014 Equity Plan). During the six months ended June 30, 2017, the Company also granted 481,373 RSUs and NSOs to purchase 320,571 shares of common stock with a grant date fair value of $1.3 million and $0.7 million, respectively, to employees under the 2014 Equity Plan. The employee RSUs and NSOs will vest over a three year period.

Stock-based compensation is included in cost of sales or operating expenses, as applicable, and consists of the following:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

 

(In thousands)

 

Cost of product revenue

 

$

236

 

 

$

199

 

 

$

440

 

 

$

391

 

Research and development expenses

 

 

160

 

 

 

148

 

 

 

298

 

 

 

288

 

Sales and marketing expenses

 

 

303

 

 

 

277

 

 

 

571

 

 

 

538

 

General and administrative expenses

 

 

675

 

 

 

809

 

 

 

1,309

 

 

 

1,586

 

Total stock-based compensation

 

$

1,374

 

 

$

1,433

 

 

$

2,618

 

 

$

2,803

 

 

Effective January 1, 2017, the Company adopted the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU 2016-09) related to the timing of accounting for the forfeitures of share based awards using a modified retrospective transition method. Under these provisions, the Company will record the impact of forfeitures of service based awards at the time an award is forfeited. Adoption of the provisions resulted in a cumulative-effect adjustment to equity as of January 1, 2017 of $0.3 million.

 

Pursuant to the “evergreen” provisions of the 2014 Equity Plan, the number of shares of common stock authorized for issuance under the plan automatically increased by 467,396 shares to 6,536,597 shares effective January 1, 2017.

As of June 30, 2017, 3,357,031 shares of common stock were reserved for issuance upon the exercise or vesting, as appropriate, of outstanding stock-based awards granted under the 2014 Equity Plan. In addition, as of June 30, 2017, 92,583 shares of common stock were reserved for issuance upon the exercise of outstanding stock options granted under the Company’s 2001 Equity Incentive Plan, as amended (the 2001 Equity Plan). Any cancellations or forfeitures of the options outstanding under the 2001 Equity Plan will result in the shares reserved for issuance upon exercise of such options becoming available for grant under the 2014 Equity Plan. As of June 30, 2017, there were 2,287,082 shares of common stock available for grant under the 2014 Equity Plan.

Earnings per Share

The Company calculates net loss per common share based on the weighted-average number of common shares outstanding during each period. Potential common stock equivalents are determined using the treasury stock method. The weighted-average number of common shares included in the computation of diluted net income (loss) gives effect to all potentially dilutive common equivalent shares, including outstanding stock options, RSUs and warrants. Common equivalent shares are excluded from the computation of diluted net income (loss) per share if their effect is antidilutive.

Segments

Operating segments are identified as components of an enterprise about which separate, discrete financial information is available for evaluation by the chief operating decision maker in making decisions on how to allocate resources and assess performance. The Company’s chief operating decision maker is the Chief Executive Officer. The Company’s chief operating decision maker reviews consolidated operating results to make decisions about allocating resources and assessing performance for the entire Company. The Company views its operations and manages its business as one operating segment.

Information about the Company’s total revenues, based on shipment destination or services location, is presented in the following table:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

 

(In thousands)

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

$

10,131

 

 

$

10,208

 

 

$

19,261

 

 

$

21,621

 

International

 

 

14,938

 

 

 

17,510

 

 

 

28,810

 

 

 

38,918

 

Total

 

$

25,069

 

 

$

27,718

 

 

$

48,071

 

 

$

60,539

 

 

Warranty Costs

The Company provides warranties for its products and records the estimated cost of such warranties within cost of sales in the period that the related revenue is recorded. The Company’s standard warranty period extends to one year from the date of shipment. This standard warranty provides that the Company’s products will be free from defects in material and workmanship, and will, under normal use, conform to the specifications for the product.

The Company’s products may be utilized in systems that may involve new technical demands and new configurations. As such, the Company regularly reviews and assesses whether warranty reserves shall be recorded in the period the related revenue is recorded. For an initial shipment of product in a system with new technical demands or configurations and where the Company is unsure of meeting the customer’s specifications, the Company will defer the recognition of product revenue and related costs until written customer acceptance is obtained.

During the six months ended June 30, 2017 and 2016, the Company recorded warranty expense of $0.9 million and $0.5 million, respectively. These specific warranty charges were related to product claims for two separate product application issues. These claims are outside the Company’s typical experience.

Recently Issued Accounting Standards

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies. Recently issued standards typically do not require adoption until a future effective date. Prior to their effective date, the Company evaluates the pronouncements to determine the potential effects of adoption to its consolidated financial statements.

Standards Implemented Since December 31, 2016

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330), which, for entities that do not measure inventory using the last-in, first-out (LIFO) or retail inventory method, changes the measurement principle for inventory from the lower of cost or market to lower of cost and net realizable value. The ASU also eliminates the requirement for these entities to consider replacement cost or net realizable value less an approximately normal profit margin when measuring inventory. Public entities are required to apply the standard for fiscal years beginning after December 15, 2016, including interim periods within those fiscal periods. The Company adopted this standard effective January 1, 2017. Application of the standard has not resulted in any material impact to the Company’s consolidated financial statements or other disclosures.

In March 2016, the FASB issued ASU 2016-09. The amendment simplifies several aspects of the accounting for share-based payment transactions including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public entities, the amendments in ASU 2016-09 are effective for interim and annual reporting periods beginning after December 15, 2016. The Company has adopted this standard effective January 1, 2017. The provisions of ASU 2016-09 related to the timing of accounting for the forfeitures of share based awards was adopted using a modified retrospective method by means of a cumulative-effect adjustment to equity as of January 1, 2017 of $0.3 million. The other provisions of ASU 2016-09 have been adopted prospectively.

Standards to be Implemented

In August 2015, the FASB issued a deferral of ASU 2014-09, Revenue from Contracts with Customers. The standard will eliminate the transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. As a result of the deferral, public entities are required to apply the revised revenue recognition standard for the annual reporting period beginning on or after December 15, 2017, including interim periods within that annual reporting period. Early application is permitted only as of annual and interim periods in fiscal years beginning after December 15, 2016. The Company expects to adopt the modified retrospective method. The Company has commenced a review of the new standard compared to current accounting policies with respect to revenue streams and customer contracts. As of June 30, 2017, the Company has not identified any accounting changes that would impact the allocation and timing of recognition of previously reported revenues. During the second half of 2017, the Company plans to finalize the review of revenue streams and customer contracts to determine the impact that this standard may have on its results of operations, financial position and disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). FASB ASU 2016-02 modifies the accounting for leases and requires that all leases be recorded on the consolidated balance sheets as assets and liabilities. This update is effective for fiscal years beginning after December 15, 2018. Early application is permitted. The Company has not yet selected a transition method and is evaluating the effect the updated standard will have on its consolidated financial statements and related disclosures. The Company currently expects that most of its operating lease commitments will be subject to the new standard and recognized as right-of-use assets and operating lease liabilities upon the adoption of ASU 2016-02, which will increase the total assets and total liabilities that it reports relative to such amounts prior to adoption.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (ASU 2016-15). This amendment addresses eight classification issues related to the statement of cash flows. For public business entities, the amendments in ASU 2016-15 are effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. The Company has not yet selected a transition method and is evaluating the effect the updated standard will have on its consolidated financial statements and related disclosures.

 

Inventories
Inventories

(3) Inventories

Inventories consist of the following:

 

 

 

June 30,

 

 

December 31,

 

 

 

2017

 

 

2016

 

 

 

(In thousands)

 

Raw materials

 

$

2,198

 

 

$

3,511

 

Finished goods

 

 

11,057

 

 

 

9,357

 

Total

 

$

13,255

 

 

$

12,868

 

 

Property, Plant and Equipment, Net
Property, Plant and Equipment, Net

(4) Property, Plant and Equipment, Net

Property, plant and equipment consist of the following:

 

 

 

June 30,

 

 

December 31,

 

 

Useful

 

 

 

2017

 

 

2016

 

 

life

 

 

 

(In thousands)

 

 

 

 

 

Construction in progress

 

$

11,019

 

 

$

11,139

 

 

 

 

Buildings

 

 

23,928

 

 

 

23,901

 

 

30 years

 

Machinery and equipment

 

 

114,880

 

 

 

113,659

 

 

3-10 years

 

Computer equipment and software

 

 

7,921

 

 

 

7,679

 

 

3 years

 

Total

 

 

157,748

 

 

 

156,378

 

 

 

 

 

Accumulated depreciation

 

 

(77,225

)

 

 

(71,984

)

 

 

 

 

Property, plant and equipment, net

 

$

80,523

 

 

$

84,394

 

 

 

 

 

 

Depreciation expense was $5.3 million and $4.8 million for the six months ended June 30, 2017 and 2016, respectively.

Construction in progress totaled $11.0 million and $11.1 million at June 30, 2017 and December 31, 2016, respectively, which included engineering designs and other pre-construction costs for the planned manufacturing facility in Statesboro, Georgia of $7.2 million at June 30, 2017 and December 31, 2016.

The Company anticipates that the impact of constrained capital investment and low activity levels in the global energy markets will continue through the end of 2017. With this view of the market, the Company in late 2016 delayed the board approved project to construct the Statesboro, Georgia manufacturing facility and its related financing to better align the capacity expansion with the Company’s assessment of demand for the 2018 to 2020 period.

Accrued Expenses
Accrued Expenses

(5) Accrued Expenses

Accrued expenses consist of the following:

 

 

 

June 30,

 

 

December 31,

 

 

 

2017

 

 

2016

 

 

 

(In thousands)

 

Employee compensation

 

$

3,604

 

 

$

2,796

 

Other accrued expenses

 

 

1,147

 

 

 

1,191

 

Total

 

$

4,751

 

 

$

3,987

 

 

Commitments and Contingencies
Commitments and Contingencies

(6) Commitments and Contingencies

Customer Supply Agreement

During 2016, the Company entered into a supply agreement and a side agreement (together, the Supply Agreement) and a joint development agreement (the JDA) with BASF SE (BASF). Pursuant to the Supply Agreement, the Company agreed to sell exclusively to BASF the Company’s Spaceloft ® A2 product at annual volumes specified by BASF, subject to certain volume limits. The Supply Agreement will terminate on December 31, 2027. Upon expiration of the Supply Agreement, the Company will be subject to a post-termination supply commitment for an additional two years. The JDA is designed to facilitate the collaboration between the parties on the development and commercialization of new products.

In addition, under the terms of the Supply Agreement, BASF will make a non-interest bearing prepayment to the Company in the aggregate amount of $22 million during the construction of the Company’s planned manufacturing facility in Statesboro, Georgia (Plant Two), subject to the Company’s prior satisfaction of certain preconditions, including securing a debt commitment from a third party lender for at least $30 million. BASF is obligated to pay the prepayment to the Company in eight equal consecutive quarterly installments commencing on the first day of the calendar quarter following the date on which the preconditions are met. Once commenced, BASF’s obligation to make such quarterly payments shall be subject to postponement in the event of delays of three months or more in the projected date of completion of Plant Two by a commensurate number of months.

After October 1, 2018, the Company will, at BASF’s instruction, credit up to 25.3% of any amounts invoiced by the Company for Spaceloft ® A2 product sold to BASF against the prepayment balance. However, BASF has no obligation to purchase products under the Supply Agreement. If any of the prepayment remains uncredited against amounts invoiced by the Company as of September 30, 2023, BASF may request that the Company repay the uncredited amount to BASF in four equal quarterly installments beginning on December 31, 2023. The repayment obligation will be secured by a security interest in real estate, plant and equipment at the Company’s Rhode Island and Georgia manufacturing facilities.

The Company anticipates that the impact of constrained capital investment and low activity levels in the global energy markets will continue through the end of 2017. With this view of the market, the Company in late 2016 delayed the board approved Plant Two project and its related financing to better align the capacity expansion with the Company’s assessment of demand for the 2018 to 2020 period. As a result, the Company has yet to fulfill the prepayment preconditions and commencement of the quarterly prepayments from BASF will be delayed until the preconditions are satisfied.

Revolving Line of Credit

The Company entered into an Amended and Restated Loan and Security Agreement with Silicon Valley Bank (Loan Agreement), on August 31, 2014, which has been subsequently amended from time to time. On January 27, 2017, the Loan Agreement was amended to extend the maturity date of the revolving credit facility to January 28, 2018. Under the Loan Agreement, the Company may borrow up to $20 million subject to compliance with certain covenants and borrowing base limitations. At the Company’s election, the interest rate applicable to borrowings may be based on the prime rate or LIBOR. Prime rate-based rates vary from prime rate plus 0.75% per annum to prime rate plus 1.75% per annum, while LIBOR-based rates vary from LIBOR plus 3.75% per annum to LIBOR plus 4.25% per annum. In addition, the Company is required to pay a monthly unused line fee of 0.5% per annum of the average unused portion of the facility. The Company’s obligations under the Loan Agreement are secured by a first priority security interest in all assets of the Company, including those at the East Providence facility, except for certain exclusions.

At June 30, 2017 and December 31, 2016, the Company had no amounts drawn on the revolving credit facility. Under the Loan Agreement, the Company is required to comply with both non-financial and financial covenants, including minimum Adjusted EBITDA and minimum Adjusted Quick Ratio, as defined. At June 30, 2017, the Company was in compliance with all such financial covenants.

The Company previously provided its landlord for its Northborough, Massachusetts facility with letters of credit securing certain obligations. As of January 31, 2017, these obligations were released by the landlord. In addition, the Company has been required to provide certain customers with letters of credit securing obligations under commercial contracts. The Company had outstanding letters of credit backed by the revolving credit facility of $2.3 million and $2.7 million at June 30, 2017 and December 31, 2016, respectively, which reduce the funds otherwise available to the Company under the facility. Based on the available borrowing base, the effective amount available to the Company under the revolving credit facility at June 30, 2017 was $10.5 million after consideration of the $2.3 million of outstanding letters of credit.

Litigation

The Company is, from time to time, a party to litigation that arises in the normal course of its business operations. See Part II, Item 1 (“Legal Proceedings”) of this Quarterly Report on Form 10-Q for a description of certain of the Company’s current legal proceedings. The Company is not presently a party to any litigation for which it believes a loss is probable requiring an amount to be accrued or a possible loss contingency requiring disclosure.

Deferred Rent
Deferred Rent

(7) Deferred Rent

  The Company leases office and warehouse space in Northborough, Massachusetts and East Providence, Rhode Island.

For leases that contain fixed increases in the minimum annual lease payment during the original term of the lease, the Company recognizes rental expense on a straight-line basis over the lease term, and records the difference between rent expense and the amount currently payable as deferred rent.

   Lease incentives for allowances for qualified leasehold improvements received from the landlord are amortized on a straight-line basis over the lease term. These improvements and the funding received from the landlord are recorded as fixed asset additions and a deferred rent liability on the consolidated balance sheet. The deferred rent liability is being amortized as a reduction to rent expense over the life of the lease.

   Cash flows from the landlord for the reimbursement of improvements have been reported within cash from operating activities, while cash flows remitted for the acquisition of leasehold improvements are classified within investing activity cash flows. As of June 30, 2017, deferred rent included $1.1 million in deferred lease incentives and $0.4 million of straight-line rental obligations.

Deferred rent consists of the following:

 

 

 

June 30,

 

 

December 31,

 

 

 

2017

 

 

2016

 

 

 

(In thousands)

 

Deferred rent

 

$

1,538

 

 

$

1,125

 

Current maturities of deferred rent

 

 

(203

)

 

 

(154

)

Deferred rent, less current maturities

 

$

1,335

 

 

$

971

 

 

Net Loss Per Share
Net Loss Per Share

(8) Net Loss Per Share

The computation of basic and diluted net loss per share consists of the following:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

 

(In thousands, except

share and per share data)

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(5,472

)

 

$

(1,387

)

 

$

(14,550

)

 

$

(3,184

)

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding, basic and diluted

 

 

23,369,179

 

 

 

23,111,127

 

 

 

23,313,668

 

 

 

23,087,299

 

Net loss per share, basic and diluted

 

$

(0.23

)

 

$

(0.06

)

 

$

(0.62

)

 

$

(0.14

)

 

Potentially dilutive common shares that were excluded from the computation of diluted net loss per share because they were anti-dilutive consist of the following:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Common stock options

 

 

2,498,737

 

 

 

2,055,398

 

 

 

2,498,737

 

 

 

2,055,398

 

Restricted common stock units

 

 

950,877

 

 

 

759,230

 

 

 

950,877

 

 

 

759,230

 

Common stock warrants

 

 

115

 

 

 

115

 

 

 

115

 

 

 

115

 

Restricted common stock awards

 

 

164,148

 

 

 

153,277

 

 

 

164,148

 

 

 

153,277

 

Total

 

 

3,613,877

 

 

 

2,968,020

 

 

 

3,613,877

 

 

 

2,968,020

 

 

In the table above, anti-dilutive shares consist of those common stock equivalents that have (i) an exercise price above the average stock price for the period or (ii) related average unrecognized stock compensation expense sufficient to buy back the entire amount of shares. The Company excludes the shares issued in connection with restricted stock awards from the calculation of basic weighted average common shares outstanding until the restrictions lapse.

Income Taxes
Income Taxes

(9) Income Taxes

The Company incurred net operating losses and recorded a full valuation allowance against net deferred tax assets for all periods presented. Accordingly, the Company has not recorded a provision for federal or state income taxes.

Subsequent Events
Subsequent Events

(10) Subsequent Events

The Company has evaluated subsequent events through August 3, 2017, the date of issuance of the unaudited consolidated financial statements for the three and six months ended June 30, 2017.

On August 2, 2017, the Company reduced the Company performance target for fiscal year 2020 with respect to 78,125 shares of restricted stock and modified the vesting conditions of NSOs to purchase 253,902 shares of common stock granted to its chief executive officer, such that the time periods to achieve certain common stock price target vesting conditions of NSOs to purchase 131,578 and 122,324 shares of common stock, were extended to a four and five year period from the date of grant, respectively.

Description of Business and Basis of Presentation (Policies)

Nature of Business

Aspen Aerogels, Inc. (the Company) is an aerogel technology company that designs, develops and manufactures innovative, high-performance aerogel insulation used primarily in the energy infrastructure and building materials markets. The Company also conducts research and development related to aerogel technology supported by funding from several agencies of the U.S. government and other institutions in the form of research and development contracts.

The Company maintains its corporate offices in Northborough, Massachusetts. The Company has three wholly owned subsidiaries: Aspen Aerogels Rhode Island, LLC, Aspen Aerogels Germany, GmbH and Aspen Aerogels Georgia, LLC.

Unaudited Interim Financial Information

The accompanying unaudited interim consolidated financial statements include the accounts of the Company and have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and disclosures normally included in the consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and accompanying notes in our Annual Report on Form 10-K for the year ended December 31, 2016 (the Annual Report), filed with the Securities and Exchange Commission on March 2, 2017.

In the opinion of the Company’s management, the unaudited interim consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments that are of a normal recurring nature and necessary for the fair statement of the Company’s financial position as of June 30, 2017 and the results of its operations for the three and six months ended June 30, 2017 and 2016 and the cash flows for the six month periods then ended.

The results of operations for the three and six months ended June 30, 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017 or any other period.

Principles of Consolidation

The accompanying consolidated financial statements, which have been prepared in accordance with U.S. GAAP, include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the consolidated financial statements requires the Company to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include allowances for doubtful accounts, sales returns and allowances, product warranty costs, inventory valuation, the carrying amount of property and equipment, stock-based compensation and deferred income taxes. The Company evaluates its estimates and assumptions on an on-going basis using historical experience and other factors, including the current economic environment, which are believed to be reasonable under the circumstances. Management adjusts such estimates and assumptions when facts and circumstances dictate. Illiquid credit markets, volatile equity markets and declines in business investment increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods.

Cash and Cash Equivalents

Cash equivalents include short-term, highly liquid instruments, which consist of money market accounts. All cash and cash equivalents are maintained with major financial institutions in North America. Deposits with these financial institutions may exceed the amount of insurance provided on such deposits; however, these deposits typically may be redeemed upon demand and, therefore, bear minimal risk.

Revenue Recognition

The Company recognizes revenue from the sale of products and performance of research and development services. Revenue is recognized when all of the following criteria are met: persuasive evidence of an arrangement exists, the price to the buyer is fixed or determinable, delivery has occurred or services have been provided, and collectability is reasonably assured.

Product Revenue

Product revenue is recognized upon transfer of title and risk of loss, which is upon shipment or delivery. The Company’s customary shipping terms are free on board (FOB) shipping point.

The Company records deferred revenue for product sales when (i) the Company has delivered products but other revenue recognition criteria have not been satisfied or (ii) payments have been received in advance of products being delivered.

Research Services Revenue

The Company performs research services under contracts with various government agencies and other institutions. The Company records revenue earned on research services contracts using the percentage-of-completion method in two ways: (1) for firm-fixed-price contracts, the Company accrues that portion of the total contract price that is allocable, on the basis of the Company’s estimates of costs incurred to date to total contract costs; and (2) for cost-plus-fixed-fee contracts, the Company records revenue that is equal to total payroll cost incurred times a stated factor plus reimbursable expenses, to a stated upper limit. The primary cost under the Company’s research service contracts is the labor effort expended in completing research, and the only deliverable, other than the labor hours expended, is reporting of research results to the customer. Because the input measure of labor hours expended is also reflective of the output measure, it is a reliable means to measure the extent of progress towards completion. Revisions in cost estimates and fees during the course of the contract are reflected in the accounting period in which the facts that require the revisions become known. Contract costs and rates used to allocate overhead to contracts are subject to audit by the respective contracting government agency. Adjustments to revenue as a result of audit are recorded in the period they become known. To date, adjustments to revenue as a result of audit have been insignificant.

Stock-based Compensation

Stock-based compensation expense is measured at the grant date based on the fair value of the award. Expense is recognized on a straight-line basis over the requisite service period for all awards with service conditions. For performance-based awards, the grant date fair value is recognized as expense when the condition is probable of being achieved, and then on a graded basis over the requisite service period. The Company uses the Black-Scholes option-pricing model to determine the fair value of service-based option awards, which requires a number of complex and subjective assumptions including fair value of the underlying security, the expected volatility of the underlying security, a risk-free interest rate and the expected term of the option. The fair value of restricted stock and restricted stock unit (RSU) grants is determined using the closing trading price of the Company’s common stock on the date of grant. The fair value of awards containing market conditions is determined using a Monte Carlo simulation model based upon the terms of the conditions, the expected volatility of the underlying security, and other relevant factors.

During the six months ended June 30, 2017, the Company granted 86,023 shares of restricted common stock and non-qualified options (NSOs) to purchase 119,133 shares of common stock with a grant date fair value of $0.4 million and $0.2 million, respectively, vesting over a period of one year to its non-employee directors under the 2014 Employee, Director and Consultant Equity Incentive Plan (the 2014 Equity Plan). During the six months ended June 30, 2017, the Company also granted 481,373 RSUs and NSOs to purchase 320,571 shares of common stock with a grant date fair value of $1.3 million and $0.7 million, respectively, to employees under the 2014 Equity Plan. The employee RSUs and NSOs will vest over a three year period.

Stock-based compensation is included in cost of sales or operating expenses, as applicable, and consists of the following:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

 

(In thousands)

 

Cost of product revenue

 

$

236

 

 

$

199

 

 

$

440

 

 

$

391

 

Research and development expenses

 

 

160

 

 

 

148

 

 

 

298

 

 

 

288

 

Sales and marketing expenses

 

 

303

 

 

 

277

 

 

 

571

 

 

 

538

 

General and administrative expenses

 

 

675

 

 

 

809

 

 

 

1,309

 

 

 

1,586

 

Total stock-based compensation

 

$

1,374

 

 

$

1,433

 

 

$

2,618

 

 

$

2,803

 

 

Effective January 1, 2017, the Company adopted the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU 2016-09) related to the timing of accounting for the forfeitures of share based awards using a modified retrospective transition method. Under these provisions, the Company will record the impact of forfeitures of service based awards at the time an award is forfeited. Adoption of the provisions resulted in a cumulative-effect adjustment to equity as of January 1, 2017 of $0.3 million.

 

Pursuant to the “evergreen” provisions of the 2014 Equity Plan, the number of shares of common stock authorized for issuance under the plan automatically increased by 467,396 shares to 6,536,597 shares effective January 1, 2017.

As of June 30, 2017, 3,357,031 shares of common stock were reserved for issuance upon the exercise or vesting, as appropriate, of outstanding stock-based awards granted under the 2014 Equity Plan. In addition, as of June 30, 2017, 92,583 shares of common stock were reserved for issuance upon the exercise of outstanding stock options granted under the Company’s 2001 Equity Incentive Plan, as amended (the 2001 Equity Plan). Any cancellations or forfeitures of the options outstanding under the 2001 Equity Plan will result in the shares reserved for issuance upon exercise of such options becoming available for grant under the 2014 Equity Plan. As of June 30, 2017, there were 2,287,082 shares of common stock available for grant under the 2014 Equity Plan.

Earnings per Share

The Company calculates net loss per common share based on the weighted-average number of common shares outstanding during each period. Potential common stock equivalents are determined using the treasury stock method. The weighted-average number of common shares included in the computation of diluted net income (loss) gives effect to all potentially dilutive common equivalent shares, including outstanding stock options, RSUs and warrants. Common equivalent shares are excluded from the computation of diluted net income (loss) per share if their effect is antidilutive.

Segments

Operating segments are identified as components of an enterprise about which separate, discrete financial information is available for evaluation by the chief operating decision maker in making decisions on how to allocate resources and assess performance. The Company’s chief operating decision maker is the Chief Executive Officer. The Company’s chief operating decision maker reviews consolidated operating results to make decisions about allocating resources and assessing performance for the entire Company. The Company views its operations and manages its business as one operating segment.

Information about the Company’s total revenues, based on shipment destination or services location, is presented in the following table:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

 

(In thousands)

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

$

10,131

 

 

$

10,208

 

 

$

19,261

 

 

$

21,621

 

International

 

 

14,938

 

 

 

17,510

 

 

 

28,810

 

 

 

38,918

 

Total

 

$

25,069

 

 

$

27,718

 

 

$

48,071

 

 

$

60,539

 

 

Warranty Costs

The Company provides warranties for its products and records the estimated cost of such warranties within cost of sales in the period that the related revenue is recorded. The Company’s standard warranty period extends to one year from the date of shipment. This standard warranty provides that the Company’s products will be free from defects in material and workmanship, and will, under normal use, conform to the specifications for the product.

The Company’s products may be utilized in systems that may involve new technical demands and new configurations. As such, the Company regularly reviews and assesses whether warranty reserves shall be recorded in the period the related revenue is recorded. For an initial shipment of product in a system with new technical demands or configurations and where the Company is unsure of meeting the customer’s specifications, the Company will defer the recognition of product revenue and related costs until written customer acceptance is obtained.

During the six months ended June 30, 2017 and 2016, the Company recorded warranty expense of $0.9 million and $0.5 million, respectively. These specific warranty charges were related to product claims for two separate product application issues. These claims are outside the Company’s typical experience.

Recently Issued Accounting Standards

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies. Recently issued standards typically do not require adoption until a future effective date. Prior to their effective date, the Company evaluates the pronouncements to determine the potential effects of adoption to its consolidated financial statements.

Standards Implemented Since December 31, 2016

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330), which, for entities that do not measure inventory using the last-in, first-out (LIFO) or retail inventory method, changes the measurement principle for inventory from the lower of cost or market to lower of cost and net realizable value. The ASU also eliminates the requirement for these entities to consider replacement cost or net realizable value less an approximately normal profit margin when measuring inventory. Public entities are required to apply the standard for fiscal years beginning after December 15, 2016, including interim periods within those fiscal periods. The Company adopted this standard effective January 1, 2017. Application of the standard has not resulted in any material impact to the Company’s consolidated financial statements or other disclosures.

In March 2016, the FASB issued ASU 2016-09. The amendment simplifies several aspects of the accounting for share-based payment transactions including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public entities, the amendments in ASU 2016-09 are effective for interim and annual reporting periods beginning after December 15, 2016. The Company has adopted this standard effective January 1, 2017. The provisions of ASU 2016-09 related to the timing of accounting for the forfeitures of share based awards was adopted using a modified retrospective method by means of a cumulative-effect adjustment to equity as of January 1, 2017 of $0.3 million. The other provisions of ASU 2016-09 have been adopted prospectively.

Standards to be Implemented

In August 2015, the FASB issued a deferral of ASU 2014-09, Revenue from Contracts with Customers. The standard will eliminate the transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. As a result of the deferral, public entities are required to apply the revised revenue recognition standard for the annual reporting period beginning on or after December 15, 2017, including interim periods within that annual reporting period. Early application is permitted only as of annual and interim periods in fiscal years beginning after December 15, 2016. The Company expects to adopt the modified retrospective method. The Company has commenced a review of the new standard compared to current accounting policies with respect to revenue streams and customer contracts. As of June 30, 2017, the Company has not identified any accounting changes that would impact the allocation and timing of recognition of previously reported revenues. During the second half of 2017, the Company plans to finalize the review of revenue streams and customer contracts to determine the impact that this standard may have on its results of operations, financial position and disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). FASB ASU 2016-02 modifies the accounting for leases and requires that all leases be recorded on the consolidated balance sheets as assets and liabilities. This update is effective for fiscal years beginning after December 15, 2018. Early application is permitted. The Company has not yet selected a transition method and is evaluating the effect the updated standard will have on its consolidated financial statements and related disclosures. The Company currently expects that most of its operating lease commitments will be subject to the new standard and recognized as right-of-use assets and operating lease liabilities upon the adoption of ASU 2016-02, which will increase the total assets and total liabilities that it reports relative to such amounts prior to adoption.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (ASU 2016-15). This amendment addresses eight classification issues related to the statement of cash flows. For public business entities, the amendments in ASU 2016-15 are effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. The Company has not yet selected a transition method and is evaluating the effect the updated standard will have on its consolidated financial statements and related disclosures.

 

Significant Accounting Policies (Tables)

Stock-based compensation is included in cost of sales or operating expenses, as applicable, and consists of the following:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

 

(In thousands)

 

Cost of product revenue

 

$

236

 

 

$

199

 

 

$

440

 

 

$

391

 

Research and development expenses

 

 

160

 

 

 

148

 

 

 

298

 

 

 

288

 

Sales and marketing expenses

 

 

303

 

 

 

277

 

 

 

571

 

 

 

538

 

General and administrative expenses

 

 

675

 

 

 

809

 

 

 

1,309

 

 

 

1,586

 

Total stock-based compensation

 

$

1,374

 

 

$

1,433

 

 

$

2,618

 

 

$

2,803

 

 

Information about the Company’s total revenues, based on shipment destination or services location, is presented in the following table:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

 

(In thousands)

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

$

10,131

 

 

$

10,208

 

 

$

19,261

 

 

$

21,621

 

International

 

 

14,938

 

 

 

17,510

 

 

 

28,810

 

 

 

38,918

 

Total

 

$

25,069

 

 

$

27,718

 

 

$

48,071

 

 

$

60,539

 

 

Inventories (Tables)
Schedule of Inventories

Inventories consist of the following:

 

 

 

June 30,

 

 

December 31,

 

 

 

2017

 

 

2016

 

 

 

(In thousands)

 

Raw materials

 

$

2,198

 

 

$

3,511

 

Finished goods

 

 

11,057

 

 

 

9,357

 

Total

 

$

13,255

 

 

$

12,868

 

 

Property, Plant and Equipment, Net (Tables)
Summary of Property, Plant and Equipment

Property, plant and equipment consist of the following:

 

 

 

June 30,

 

 

December 31,

 

 

Useful

 

 

 

2017

 

 

2016

 

 

life

 

 

 

(In thousands)

 

 

 

 

 

Construction in progress

 

$

11,019

 

 

$

11,139

 

 

 

 

Buildings

 

 

23,928

 

 

 

23,901

 

 

30 years

 

Machinery and equipment

 

 

114,880

 

 

 

113,659

 

 

3-10 years

 

Computer equipment and software

 

 

7,921

 

 

 

7,679

 

 

3 years

 

Total

 

 

157,748

 

 

 

156,378

 

 

 

 

 

Accumulated depreciation

 

 

(77,225

)

 

 

(71,984

)

 

 

 

 

Property, plant and equipment, net

 

$

80,523

 

 

$

84,394

 

 

 

 

 

 

Accrued Expenses (Tables)
Schedule of Accrued Expenses

Accrued expenses consist of the following:

 

 

 

June 30,

 

 

December 31,

 

 

 

2017

 

 

2016

 

 

 

(In thousands)

 

Employee compensation

 

$

3,604

 

 

$

2,796

 

Other accrued expenses

 

 

1,147

 

 

 

1,191

 

Total

 

$

4,751

 

 

$

3,987

 

 

Deferred Rent (Tables)
Summary of Deferred Rent

Deferred rent consists of the following:

 

 

 

June 30,

 

 

December 31,

 

 

 

2017

 

 

2016

 

 

 

(In thousands)

 

Deferred rent

 

$

1,538

 

 

$

1,125

 

Current maturities of deferred rent

 

 

(203

)

 

 

(154

)

Deferred rent, less current maturities

 

$

1,335

 

 

$

971

 

 

Net Loss Per Share (Tables)

The computation of basic and diluted net loss per share consists of the following:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

 

(In thousands, except

share and per share data)

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(5,472

)

 

$

(1,387

)

 

$

(14,550

)

 

$

(3,184

)

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding, basic and diluted

 

 

23,369,179

 

 

 

23,111,127

 

 

 

23,313,668

 

 

 

23,087,299

 

Net loss per share, basic and diluted

 

$

(0.23

)

 

$

(0.06

)

 

$

(0.62

)

 

$

(0.14

)

 

Potentially dilutive common shares that were excluded from the computation of diluted net loss per share because they were anti-dilutive consist of the following:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Common stock options

 

 

2,498,737

 

 

 

2,055,398

 

 

 

2,498,737

 

 

 

2,055,398

 

Restricted common stock units

 

 

950,877

 

 

 

759,230

 

 

 

950,877

 

 

 

759,230

 

Common stock warrants

 

 

115

 

 

 

115

 

 

 

115

 

 

 

115

 

Restricted common stock awards

 

 

164,148

 

 

 

153,277

 

 

 

164,148

 

 

 

153,277

 

Total

 

 

3,613,877

 

 

 

2,968,020

 

 

 

3,613,877

 

 

 

2,968,020

 

 

Description of Business and Basis of Presentation - Additional Information (Detail)
6 Months Ended
Jun. 30, 2017
Subsidiary
Organization Consolidation And Presentation Of Financial Statements [Abstract]
 
Number of Subsidiaries
Significant Accounting Policies - Additional Information (Detail) (USD $)
In Millions, except Share data, unless otherwise specified
6 Months Ended 0 Months Ended 6 Months Ended
Jun. 30, 2017
Segment
Jun. 30, 2016
Jan. 1, 2017
ASU 2016-09 [Member]
Jan. 2, 2017
2014 Equity Plan [Member]
Jun. 30, 2017
2014 Equity Plan [Member]
Jun. 30, 2017
2014 Equity Plan [Member]
Restricted Stock Units [Member]
Jun. 30, 2017
2014 Equity Plan [Member]
Restricted Stock Units [Member]
Non-Employee Directors [Member]
Jun. 30, 2017
2014 Equity Plan [Member]
Non-Qualified Stock Options [Member]
Jun. 30, 2017
2014 Equity Plan [Member]
Non-Qualified Stock Options [Member]
Non-Employee Directors [Member]
Jun. 30, 2017
2001 Equity Incentive Plan [Member]
Summary Of Significant Accounting Policies [Line Items]
 
 
 
 
 
 
 
 
 
 
Stock-based awards granted
 
 
 
 
 
481,373 
86,023 
 
 
 
Stock-based awards granted to purchase common stock
 
 
 
 
 
 
 
320,571 
119,133 
 
Stock-based award vesting period
 
 
 
 
 
3 years 
1 year 
3 years 
1 year 
 
Stock-based award grant date fair value
 
 
 
 
 
$ 1.3 
$ 0.4 
$ 0.7 
$ 0.2 
 
Authorized for issuance, number of shares increased by
 
 
 
467,396 
 
 
 
 
 
 
Increased number of shares authorized for grant
 
 
 
6,536,597 
2,287,082 
 
 
 
 
 
Shares reserved for issuance
 
 
 
 
3,357,031 
 
 
 
 
92,583 
Number of segment
 
 
 
 
 
 
 
 
 
Standard product warranty period
1 year 
 
 
 
 
 
 
 
 
 
Warranty expense
0.9 
0.5 
 
 
 
 
 
 
 
 
Cumulative effect adjustment to equity
 
 
$ 0.3 
 
 
 
 
 
 
 
Significant Accounting Policies - Summary of Stock Based Compensation Included in Cost of Sales or Operating Expenses (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
 
 
 
 
Total stock-based compensation
$ 1,374 
$ 1,433 
$ 2,618 
$ 2,803 
Cost of Product Revenue [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
 
 
 
 
Total stock-based compensation
236 
199 
440 
391 
Research and Development Expenses [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
 
 
 
 
Total stock-based compensation
160 
148 
298 
288 
Sales and Marketing Expenses [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
 
 
 
 
Total stock-based compensation
303 
277 
571 
538 
General and Administrative Expenses [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
 
 
 
 
Total stock-based compensation
$ 675 
$ 809 
$ 1,309 
$ 1,586 
Significant Accounting Policies - Schedule of Total Revenues, Based on Shipment Destination or Research Services Location (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Segment Reporting Information [Line Items]
 
 
 
 
Revenue
$ 25,069 
$ 27,718 
$ 48,071 
$ 60,539 
U.S. [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Revenue
10,131 
10,208 
19,261 
21,621 
International [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Revenue
$ 14,938 
$ 17,510 
$ 28,810 
$ 38,918 
Inventories - Schedule of Inventories (Detail) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2017
Dec. 31, 2016
Inventory Disclosure [Abstract]
 
 
Raw materials
$ 2,198 
$ 3,511 
Finished goods
11,057 
9,357 
Total
$ 13,255 
$ 12,868 
Property, Plant and Equipment, Net - Summary of Property, Plant and Equipment (Detail) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2017
Dec. 31, 2016
Property Plant and Equipment [Line Items]
 
 
Property, plant and equipment, gross
$ 157,748 
$ 156,378 
Accumulated depreciation
(77,225)
(71,984)
Property, plant and equipment, net
80,523 
84,394 
Construction in Progress [Member]
 
 
Property Plant and Equipment [Line Items]
 
 
Property, plant and equipment, gross
11,019 
11,139 
Buildings [Member]
 
 
Property Plant and Equipment [Line Items]
 
 
Property, plant and equipment, gross
23,928 
23,901 
Property, plant and equipment, Useful life
30 years 
 
Machinery and Equipment [Member]
 
 
Property Plant and Equipment [Line Items]
 
 
Property, plant and equipment, gross
114,880 
113,659 
Machinery and Equipment [Member] |
Minimum [Member]
 
 
Property Plant and Equipment [Line Items]
 
 
Property, plant and equipment, Useful life
3 years 
 
Machinery and Equipment [Member] |
Maximum [Member]
 
 
Property Plant and Equipment [Line Items]
 
 
Property, plant and equipment, Useful life
10 years 
 
Computer Equipment and Software [Member]
 
 
Property Plant and Equipment [Line Items]
 
 
Property, plant and equipment, gross
$ 7,921 
$ 7,679 
Property, plant and equipment, Useful life
3 years 
 
Property, Plant and Equipment, Net - Additional Information (Detail) (USD $)
6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Dec. 31, 2016
Property Plant and Equipment [Line Items]
 
 
 
Depreciation expense
$ 5,300,000 
$ 4,800,000 
 
Property, plant and equipment, gross
157,748,000 
 
156,378,000 
Construction in Progress [Member]
 
 
 
Property Plant and Equipment [Line Items]
 
 
 
Property, plant and equipment, gross
11,019,000 
 
11,139,000 
Statesboro, Georgia [Member] |
Construction in Progress [Member]
 
 
 
Property Plant and Equipment [Line Items]
 
 
 
Property, plant and equipment, gross
$ 7,200,000 
 
$ 7,200,000 
Accrued Expenses - Schedule of Accrued Expenses (Detail) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2017
Dec. 31, 2016
Accrued Liabilities Current [Abstract]
 
 
Employee compensation
$ 3,604 
$ 2,796 
Other accrued expenses
1,147 
1,191 
Total
$ 4,751 
$ 3,987 
Commitments and Contingencies - Additional Information (Detail) (USD $)
6 Months Ended 0 Months Ended 6 Months Ended
Jun. 30, 2017
Silicon Valley Bank Credit Facility [Member]
Loan Agreement [Member]
Jan. 27, 2017
Silicon Valley Bank Credit Facility [Member]
Loan Agreement [Member]
Revolving Credit Facility [Member]
Jun. 30, 2017
Silicon Valley Bank Credit Facility [Member]
Loan Agreement [Member]
Revolving Credit Facility [Member]
Dec. 31, 2016
Silicon Valley Bank Credit Facility [Member]
Loan Agreement [Member]
Revolving Credit Facility [Member]
Jun. 30, 2017
Minimum [Member]
Prime Rate [Member]
Silicon Valley Bank Credit Facility [Member]
Loan Agreement [Member]
Jun. 30, 2017
Minimum [Member]
LIBOR Rate [Member]
Silicon Valley Bank Credit Facility [Member]
Loan Agreement [Member]
Jun. 30, 2017
Maximum [Member]
Prime Rate [Member]
Silicon Valley Bank Credit Facility [Member]
Loan Agreement [Member]
Jun. 30, 2017
Maximum [Member]
LIBOR Rate [Member]
Silicon Valley Bank Credit Facility [Member]
Loan Agreement [Member]
Jun. 30, 2017
Supply and Joint Development Agreement [Member]
BASF [Member]
Installment
Jun. 30, 2017
Supply and Joint Development Agreement [Member]
BASF [Member]
Maximum [Member]
Jun. 30, 2017
Supply and Joint Development Agreement [Member]
BASF [Member]
Third Party Lender [Member]
Minimum [Member]
Plant Two [Member]
Commitments And Contingencies [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Supply agreement termination date
 
 
 
 
 
 
 
 
Dec. 31, 2027 
 
 
Non-interest bearing prepayment, aggregate amount
 
 
 
 
 
 
 
 
$ 22,000,000 
 
 
Secured debt, commitment
 
 
 
 
 
 
 
 
 
 
30,000,000 
Number of quarterly installments
 
 
 
 
 
 
 
 
 
 
Credit limit percentage on prepayment balance
 
 
 
 
 
 
 
 
 
25.30% 
 
Extended maturity date
 
Jan. 28, 2018