Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
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Statement Of Financial Position [Abstract] | ||
Allowance for accounts receivables | $ 122 | $ 2,877 |
Preferred stock, par value | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 125,000,000 | 125,000,000 |
Common stock, shares issued | 24,300,264 | 23,973,517 |
Common stock, shares outstanding | 24,300,264 | 23,973,517 |
Consolidated Statements of Operations - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Revenue: | ||||
Total revenue | $ 35,425 | $ 23,937 | $ 92,870 | $ 68,682 |
Cost of revenue: | ||||
Gross profit | 7,742 | 1,529 | 14,974 | 7,083 |
Operating expenses: | ||||
Research and development | 2,046 | 1,384 | 5,842 | 4,627 |
Sales and marketing | 3,992 | 3,061 | 11,012 | 10,281 |
General and administrative | 3,857 | 3,453 | 11,449 | 12,149 |
Total operating expenses | 9,895 | 7,898 | 28,303 | 27,057 |
Loss from operations | (2,153) | (6,369) | (13,329) | (19,974) |
Interest expense, net | (136) | (163) | (280) | (358) |
Total interest expense, net | (136) | (163) | (280) | (358) |
Net loss | $ (2,289) | $ (6,532) | $ (13,609) | $ (20,332) |
Net loss per share: | ||||
Basic and diluted | $ (0.09) | $ (0.27) | $ (0.57) | $ (0.86) |
Weighted-average common shares outstanding: | ||||
Basic and diluted | 24,171,811 | 23,808,703 | 24,074,565 | 23,707,245 |
Product [Member] | ||||
Revenue: | ||||
Total revenue | $ 35,046 | $ 23,342 | $ 90,739 | $ 66,978 |
Cost of revenue: | ||||
Cost of revenue | 27,510 | 22,154 | 76,703 | 60,853 |
Research Services [Member] | ||||
Revenue: | ||||
Total revenue | 379 | 595 | 2,131 | 1,704 |
Cost of revenue: | ||||
Cost of revenue | $ 173 | $ 254 | $ 1,193 | $ 746 |
Description of Business and Basis of Presentation |
9 Months Ended |
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Sep. 30, 2019 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
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. Liquidity During the nine months ended September 30, 2019, the Company incurred a net loss of $13.6 million and used $5.8 million of cash in operations. The Company had a cash and cash equivalents balance of $1.2 million and outstanding borrowing under its revolving line of credit of $4.9 million as of September 30, 2019 (see note 7). After giving effect to outstanding borrowings and letters of credit, the additional amount available to the Company at September 30, 2019 under the revolving line of credit was $7.6 million. The existing revolving line of credit matures on April 28, 2020. The Company is making investments to increase capacity at its existing manufacturing facility in East Providence, Rhode Island and to develop new technologies and business opportunities. The Company expects its existing cash balance and the amount anticipated to be available under the existing revolving line of credit will be sufficient to fund a portion of these investments. The Company plans to manage other capital expenditures and working capital balances to maintain the cash resources required to support current operating requirements. The Company will need to supplement its cash balance and amounts available under its revolving line of credit with anticipated cash flows from operations, debt financings, customer prepayments, technology licensing agreements, or equity financings to provide the capital required to complete the expansion of the existing manufacturing facility and to fund its strategic business initiatives. 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, 2018 (the Annual Report), filed with the Securities and Exchange Commission on March 8, 2019. 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 September 30, 2019 and the results of its operations and stockholders’ equity for the three and nine months ended September 30, 2019 and 2018 and the cash flows for the nine month periods then ended. The Company has evaluated events through the date of this filing. The results of operations for the three and nine months ended September 30, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019 or any other period. |
Significant Accounting Policies |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 warrant. Illiquid credit markets, volatile equity markets and declines in business investment can 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. Concentration of Credit Risk Financial instruments, which potentially expose the Company to concentrations of credit risk, consist principally of accounts receivable. The Company maintains an allowance for doubtful accounts based on its assessment of the collectability of accounts receivable. The Company reviews the allowance for doubtful accounts quarterly. During the year ended December 31, 2018, the Company recorded a charge for a customer uncollectible accounts receivable of $2.8 million. As of September 30, 2019, the Company determined that collection of the remaining unpaid accounts receivable from this customer of $2.6 million is unlikely and recorded a write-off of the accounts receivable and the corresponding allowance for doubtful accounts. Revenue Recognition On January 1, 2018, the Company adopted Accounting Standards Codification 606, Revenue from Contracts with Customers (ASC 606). See note 3 for further details. Leases On January 1, 2019, the Company adopted Accounting Standards Update (ASU) 2016-02, Leases (Topic 842). See note 8 for further details. 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 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 nature of the conditions, the expected volatility of the underlying security, and other relevant factors. During the nine months ended September 30, 2019, the Company granted 50,328 shares of restricted common stock with a grant date fair value of $0.3 million and non-qualified options (NSOs) to purchase 71,700 shares of common stock with a grant date fair value of $0.2 million 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 nine months ended September 30, 2019, the Company granted 654,582 restricted common stock units (RSUs) with a grant date fair value of $2.4 million and NSOs to purchase 632,183 shares of common stock with a grant date fair value of $1.1 million to employees under the 2014 Equity Plan. The RSUs and NSOs granted to employees will vest over a three-year period. During the nine months ended September 30, 2019, the Company also granted NSOs to purchase 20,000 shares of common stock under the 2014 Equity Plan to an outside consultant which will vest on March 26, 2020 with a grant date fair value of less than $0.1 million. Stock-based compensation is included in cost of revenue or operating expenses, as applicable, and consists of the following:
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 479,470 shares to 7,488,930 shares effective January 1, 2019. As of September 30, 2019, 4,703,199 shares of common stock were reserved for issuance upon the exercise or vesting of outstanding stock-based awards granted under the 2014 Equity Plan. In addition, as of September 30, 2019, 86,074 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 September 30, 2019, the Company has either issued or reserved in connection with statutory tax withholdings a total of 1,782,795 shares under the 2014 Equity Plan. As of September 30, 2019, there were 916,862 shares of common stock available for future grant under the 2014 Equity Plan. Net Loss 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 loss gives effect to all potentially dilutive common equivalent shares, including outstanding stock options, and RSUs. Common equivalent shares are excluded from the computation of diluted net 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:
Warranty The Company provides warranties for its products and records the estimated cost within cost of revenue 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 involve new technical demands and new configurations. Accordingly, the Company regularly reviews and assesses whether warranty reserves should be recorded in the period the related revenue is recorded. For an initial shipment of product for use in a system with new technical demands or new 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. The Company did not record any warranty expense during the nine months ended September 30, 2019 and 2018. As of September 30, 2019, the Company had satisfied all warranty claims. Recently Issued Accounting Standards From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (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, 2018 In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). FASB ASU 2016-02 modified the accounting for leases and requires that all leases be recorded on the consolidated balance sheets as assets and liabilities. This standard was effective for fiscal years beginning after December 15, 2018. The Company adopted this standard on January 1, 2019 using the modified retrospective transition approach with the effective date as the date of initial application. As a result, the Company did not update financial information or provide the disclosures otherwise required under the new standard for dates and periods before January 1, 2019. To measure its lease liabilities, the Company used its incremental borrowing rate as of the date of adoption or the rate implicit in the lease, if available. The discount rate was applied to the remaining lease term and remaining payments at the date of adoption. The Company also elected the package of practical expedients under the new standard, which permitted the Company to not reassess prior conclusions about lease identification, lease classification, and initial direct costs. The most significant effects of this new standard on the consolidated financial statements related to the recognition of new right-of-use (ROU) assets and lease liabilities on the consolidated balance sheets and the provision of significant new disclosures about leasing activities. Upon adoption on January 1, 2019, the Company recognized operating lease liabilities of approximately $6.0 million with corresponding ROU assets of approximately $4.6 million. Additionally, the Company derecognized deferred rent liabilities of $1.4 million. This standard has not materially impacted the Company’s consolidated net loss or net cash used in operations. The Company also elected the short-term lease recognition exemption for all leases that qualify. For leases that qualify for this exemption, the Company does not recognize ROU assets or lease liabilities. In addition, the Company elected the practical expedient to not separate non-lease components from the associated lease components for all of its equipment leases. Standards to be Implemented The Company believes that the impact of recently issued accounting standards that are not yet effective will not have a material impact on its consolidated financial statements. |
Revenue from Contracts with Customers |
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Revenue From Contract With Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contracts with Customers |
(3) Revenue from Contracts with Customers On January 1, 2018, the Company Adopted Accounting Standards Codification 606, Revenue from Contracts with Customers (ASC 606) using the modified retrospective method for all contracts not completed as of the date of adoption. The adoption of ASC 606 did not have a material impact on the allocation and timing of the recognition of previously reported revenues from the sale of products, subsea projects or the performance of research services. In addition, the Company determined that there are no incremental contract costs or contract fulfillment costs associated with the adoption of ASC 606. The adoption of ASC 606 represented a change in accounting principle that more closely aligns revenue recognition with the delivery of the Company's product or performance of research services and will provide financial statement readers with enhanced disclosures. Revenue Recognition Revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps: (i) identification of the contract with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the separate performance obligations in the contract; and (v) recognition of the revenue associated with performance obligations as they are satisfied. The Company applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price based on the estimated relative standalone-selling prices of the promised products or services underlying each performance obligation. The Company determines standalone-selling prices based on the price at which the performance obligation is sold separately. If the standalone-selling price is not observable through past transactions, the Company estimates the standalone-selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. When determining the transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before or significantly after performance, resulting in a significant financing component. Applying the practical expedient in paragraph ASC 606-10-32-18, the Company does not assess whether a significant financing component exists if the period between when the Company performs its obligations under the contract and when the customer pays is one year or less. The Company did not have any contracts outstanding at December 31, 2018 and did not enter into any contracts during the nine months ended September 30, 2019 that contained a significant financing component. 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 the completion of required performance obligations. Shipping and Handling Costs Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as fulfillment costs and are included in the cost of product revenue. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these products or research services. Product Revenue The Company generally enters into contracts containing one type of performance obligation. The Company recognizes product revenue when the performance obligation is satisfied, which is generally upon delivery according to contractual shipping terms within customer purchase orders. The Company also enters into rebate agreements with certain customers. These agreements may be considered an additional performance obligation of the Company or variable consideration within a contract. Rebates are recorded as a reduction of revenue in the period the related product revenue is recognized. A corresponding liability is recorded as a component of deferred revenue on the consolidated balance sheets. These arrangements are primarily based on the customer attaining contractually specified sales volumes. The Company estimates the amount of its product sales that may be returned by its customers and records this estimate as a reduction of revenue in the period the related product revenue is recognized. The Company currently estimates product return liabilities using historical rates of return, current quarter credit sales, and specific items of exposure on a contract-by-contract basis. Sales return reserves were approximately $0.1 million at both September 30, 2019 and December 31, 2018. Subsea Projects The Company manufactures and sells subsea products that are designed for pipe-in-pipe applications in offshore oil production and are typically customized to meet customer specifications. Subsea products typically have no alternative use and contain an enforceable right to payment. Customer invoicing terms for subsea products are typically based on certain milestones within the production and delivery schedule. Under the provisions of ASC 606, the Company recognizes revenue at a point in time when transfer of control of the products is passed to the customer, or over time utilizing the input/cost-to-cost method. The timing of revenue recognition is assessed on a contract-by-contract basis. During the nine months ended September 30, 2019 and 2018, the Company recognized revenue of $14.4 million and $2.4 million, respectively, in connection with subsea projects. Research Services The Company performs research services under contracts with various government agencies and other institutions. These contracts generally have one type of performance obligation associated with the provision of research services including functional licenses to any resulting intellectual property. The Company records revenue 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 the research. Typically, the only deliverable, other than the labor hours expended, is reporting research results to the customer or delivery of research grade aerogel products. 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 toward 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 within the period they become known. To date, adjustments to revenue as a result of contracting agency audits have been insignificant. Disaggregation of Revenue In the following tables, revenue is disaggregated by primary geographical region and source of revenue:
Contract Balances The following table presents changes in the Company’s contract assets and contract liabilities during the nine months ended September 30, 2019:
During the nine months ended September 30, 2019, the Company recognized $1.9 million of revenue that was included in deferred revenue at the beginning of the period. A contract asset is recorded when the Company satisfies a performance obligation by transferring a promised good or service and has earned the right to consideration from its customer. These assets may represent a conditional or unconditional right to consideration and are included within accounts receivable on the consolidated balance sheets. A contract liability is recorded when consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services under the terms of the contract. Contract liabilities are recognized as revenue after control of the products or services is transferred to the customer and all revenue recognition criteria have been met. |
Inventories |
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Inventories |
(4) Inventories Inventories consist of the following:
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Property, Plant and Equipment, Net |
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Property, Plant and Equipment, Net |
(5) Property, Plant and Equipment, Net Property, plant and equipment consist of the following:
Depreciation expense was $7.7 million and $8.3 million for the nine months ended September 30, 2019 and 2018, respectively. Construction in progress included $0.1 million and $1.2 million at September 30, 2019 and December 31, 2018, respectively, related to projects associated with the Company’s plan to expand the capacity of the East Providence, Rhode Island facility. |
Accrued Expenses |
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Accrued Expenses |
(6) Accrued Expenses Accrued expenses consist of the following:
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Commitments and Contingencies |
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Sep. 30, 2019 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies |
(7) Commitments and Contingencies Customer Supply Agreement The Company is party to a supply agreement, as amended, with BASF Polyurethanes GmbH (BASF) (the Supply Agreement) and a joint development agreement with BASF SE (the JDA). Pursuant to the Supply Agreement, the Company will sell exclusively to BASF certain of the Company’s products at annual volumes to be specified by BASF, subject to certain volume limits. However, BASF has no obligation to purchase products under the Supply Agreement. The Supply Agreement will terminate on December 31, 2027 with respect to the Company’s Spaceloft A2 product and December 31, 2028 with respect to a new product developed under the JDA. Upon the expiration of the Supply Agreement with respect to each product, the Company will be subject to a post-termination supply commitment for an additional two years. The JDA is designed to facilitate collaboration by the parties on the development and commercialization of new products. In addition, BASF, in its sole discretion, may make prepayments to the Company in the aggregate amount of up to $22.0 million during the term of the Supply Agreement. These prepayment obligations are secured by a security interest in real estate, plant and equipment at the Company’s Rhode Island facility and a license to certain intellectual property. BASF made a prepayment in the amount of $5.0 million to the Company in 2018 (the 2018 Prepayment). Beginning January 1, 2019, BASF may require that the Company credit up to 25.3% of any amounts invoiced by the Company for Spaceloft A2 product sold to BASF against the 2018 Prepayment balance. If any of the 2018 Prepayment remains uncredited as of December 31, 2021, BASF may require that the Company repay the uncredited amount to BASF. Pursuant to the first addendum to the Supply Agreement, on January 30, 2019, BASF made an additional prepayment in the amount of $5.0 million to the Company (the 2019 Prepayment). After January 1, 2020, the Company will credit 50.0% of any amounts that it invoices for the newly developed product sold to BASF against the outstanding balance of the 2019 Prepayment. After December 31, 2022, BASF may require that the Company credit an additional 24.7% of any amounts invoiced by the Company for Spaceloft A2 product sold to BASF against the outstanding balance of the 2019 Prepayment, if any, or may require that the Company repay the uncredited amount of the 2019 Prepayment to BASF in full. As of September 30, 2019, the Company had received $10.0 million in prepayments from BASF and applied less than $0.1 million of credits against amounts invoiced. The prepayments are recorded on the balance sheet as a prepayment liability, net of the current portion of $0.1 million which is included within deferred revenue. The amounts and terms of additional prepayment installments, if any, are subject to negotiation between the Company and BASF. Revolving Line of Credit The Company is party to an Amended and Restated Loan and Security Agreement with Silicon Valley Bank (the Loan Agreement). On March 4, 2019, the Loan Agreement was amended to extend the maturity date of the revolving credit facility to April 28, 2020. Under the revolving credit facility, the Company is permitted to borrow a maximum of $20.0 million, subject to continued covenant compliance and borrowing base requirements. At the Company’s election, the interest rate applicable to borrowings under the revolving credit facility may be based on prime rate or LIBOR. Prime rate-based rates vary from prime rate plus 0.75% per annum to prime rate plus 2.00% 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 revolving line facility fee of 0.5% per annum of the average unused portion of the revolving credit facility. Under the Loan Agreement, the Company is required to comply with both non-financial and financial covenants, including a minimum EBITDA covenant, as defined. At September 30, 2019, the Company was in compliance with all such covenants. Obligations under the Loan Agreement are secured by a security interest in all assets of the Company, including those at the East Providence facility, except for certain exclusions. The Company intends to extend or replace the facility prior to its maturity. At September 30, 2019 and December 31, 2018, the Company had $4.9 million and $4.2 million, respectively, drawn on the revolving credit facility. In addition, the Company has been required to provide letters of credit to secure obligations under certain commercial contracts and other obligations. The Company had outstanding letters of credit backed by the revolving credit facility of $0.7 million and $1.6 million at September 30, 2019 and December 31, 2018, respectively, which reduce the funds otherwise available to the Company under the facility. At September 30, 2019, the amount available to the Company under the revolving credit facility was $7.6 million after giving effect to $4.9 million in outstanding borrowings and $0.7 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. |
Leases |
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Leases |
(8) Leases The Company leases office and warehouse space in Northborough, Massachusetts and East Providence, Rhode Island under operating leases. Under these agreements, the Company is obligated to pay annual rent, real estate taxes, and certain other operating expenses. The Company also leases equipment under operating leases. The Company’s operating leases expire at various dates through 2026. On January 1, 2019, the Company adopted ASU 2016-02 which modifies the accounting for leases and requires that all leases be recorded on the consolidated balance sheets as assets and liabilities. The Company adopted this standard using the modified retrospective transition approach with the effective date as the date of initial application. As a result, the Company did not update financial information or provide the disclosures otherwise required under the new standard for dates and periods before January 1, 2019. The Company also elected the package of practical expedients under the new standard, which permits the Company to not reassess prior conclusions about lease identification, lease classification, and initial direct costs. In addition, the Company elected the short-term lease recognition exemption under which the Company will not recognize ROU assets or lease liabilities for all leases that qualify. The Company also elected the practical expedient to not separate non-lease components from the associated lease components for all of its equipment leases. The Company determines if an arrangement is a lease at inception. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s payment obligations under the lease. Operating lease ROU assets and liabilities are recognized based on the present value of lease payments over the lease term. To measure its lease liabilities, the Company uses its incremental borrowing rate or the rate implicit in the lease, if available. ROU assets also include any direct costs and prepaid lease payments but exclude any lease incentives received. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company elected the short-term lease recognition exemption for all leases that qualify. For leases that qualify for this exemption, the Company does not recognize ROU assets or lease liabilities. For lease agreements with lease and non-lease components, the Company accounts for each component separately. However, in the case of equipment leases, the Company accounts for lease and non-lease components as a single component. Prior to the Company’s adoption of ASU 2016-02, the Company recorded the difference between rent expense recognized on a straight-line basis and the contractual payments as deferred rent. Deferred rent consisted of the following at December 31, 2018:
Upon adoption of ASU 2016-02 on January 1, 2019, the Company recognized operating lease liabilities of approximately $6.0 million with corresponding ROU assets of approximately $4.6 million. Additionally, the Company derecognized deferred rent liabilities of $1.4 million. Maturities of operating lease liabilities at September 30, 2019 are as follows:
The Company incurred operating lease costs of $1.2 million during the nine months ended September 30, 2019. Cash payments related to operating lease liabilities were $1.1 million during the nine months ended September 30, 2019. At September 30, 2019, the weighted average remaining lease term for operating leases was 5.6 years. At September 30, 2019, the weighted average discount rate for operating leases was 7.9%. |
Net Loss Per Share |
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Net Loss Per Share |
(9) Net Loss Per Share The computation of basic and diluted net loss per share consists of the following:
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:
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 |
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Income Tax Disclosure [Abstract] | |
Income Taxes |
(10) Income Taxes The Company incurred net operating losses and recorded a full valuation allowance against net deferred assets for all periods presented. Accordingly, the Company has not recorded a provision for federal or state income taxes. |
Subsequent Events |
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Subsequent Events [Abstract] | |
Subsequent Events |
(11) Subsequent Events The Company has evaluated subsequent events through October 31, 2019, the date of issuance of the consolidated financial statements for the three and nine months ended September 30, 2019.
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Description of Business and Basis of Presentation (Policies) |
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Nature of Business |
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. |
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Liquidity |
Liquidity During the nine months ended September 30, 2019, the Company incurred a net loss of $13.6 million and used $5.8 million of cash in operations. The Company had a cash and cash equivalents balance of $1.2 million and outstanding borrowing under its revolving line of credit of $4.9 million as of September 30, 2019 (see note 7). After giving effect to outstanding borrowings and letters of credit, the additional amount available to the Company at September 30, 2019 under the revolving line of credit was $7.6 million. The existing revolving line of credit matures on April 28, 2020. The Company is making investments to increase capacity at its existing manufacturing facility in East Providence, Rhode Island and to develop new technologies and business opportunities. The Company expects its existing cash balance and the amount anticipated to be available under the existing revolving line of credit will be sufficient to fund a portion of these investments. The Company plans to manage other capital expenditures and working capital balances to maintain the cash resources required to support current operating requirements. The Company will need to supplement its cash balance and amounts available under its revolving line of credit with anticipated cash flows from operations, debt financings, customer prepayments, technology licensing agreements, or equity financings to provide the capital required to complete the expansion of the existing manufacturing facility and to fund its strategic business initiatives. |
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Unaudited Interim Financial Information |
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, 2018 (the Annual Report), filed with the Securities and Exchange Commission on March 8, 2019. 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 September 30, 2019 and the results of its operations and stockholders’ equity for the three and nine months ended September 30, 2019 and 2018 and the cash flows for the nine month periods then ended. The Company has evaluated events through the date of this filing. The results of operations for the three and nine months ended September 30, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019 or any other period. |
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Principles of Consolidation |
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. |
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Use of Estimates |
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 warrant. Illiquid credit markets, volatile equity markets and declines in business investment can 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. |
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Cash and Cash Equivalents |
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. |
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Concentration of Credit Risk |
Concentration of Credit Risk Financial instruments, which potentially expose the Company to concentrations of credit risk, consist principally of accounts receivable. The Company maintains an allowance for doubtful accounts based on its assessment of the collectability of accounts receivable. The Company reviews the allowance for doubtful accounts quarterly. During the year ended December 31, 2018, the Company recorded a charge for a customer uncollectible accounts receivable of $2.8 million. As of September 30, 2019, the Company determined that collection of the remaining unpaid accounts receivable from this customer of $2.6 million is unlikely and recorded a write-off of the accounts receivable and the corresponding allowance for doubtful accounts. |
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Revenue Recognition |
Revenue Recognition On January 1, 2018, the Company adopted Accounting Standards Codification 606, Revenue from Contracts with Customers (ASC 606). See note 3 for further details. On January 1, 2018, the Company Adopted Accounting Standards Codification 606, Revenue from Contracts with Customers (ASC 606) using the modified retrospective method for all contracts not completed as of the date of adoption. The adoption of ASC 606 did not have a material impact on the allocation and timing of the recognition of previously reported revenues from the sale of products, subsea projects or the performance of research services. In addition, the Company determined that there are no incremental contract costs or contract fulfillment costs associated with the adoption of ASC 606. The adoption of ASC 606 represented a change in accounting principle that more closely aligns revenue recognition with the delivery of the Company's product or performance of research services and will provide financial statement readers with enhanced disclosures. Revenue Recognition Revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps: (i) identification of the contract with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the separate performance obligations in the contract; and (v) recognition of the revenue associated with performance obligations as they are satisfied. The Company applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price based on the estimated relative standalone-selling prices of the promised products or services underlying each performance obligation. The Company determines standalone-selling prices based on the price at which the performance obligation is sold separately. If the standalone-selling price is not observable through past transactions, the Company estimates the standalone-selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. When determining the transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before or significantly after performance, resulting in a significant financing component. Applying the practical expedient in paragraph ASC 606-10-32-18, the Company does not assess whether a significant financing component exists if the period between when the Company performs its obligations under the contract and when the customer pays is one year or less. The Company did not have any contracts outstanding at December 31, 2018 and did not enter into any contracts during the nine months ended September 30, 2019 that contained a significant financing component. 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 the completion of required performance obligations. Shipping and Handling Costs Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as fulfillment costs and are included in the cost of product revenue. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these products or research services. Product Revenue The Company generally enters into contracts containing one type of performance obligation. The Company recognizes product revenue when the performance obligation is satisfied, which is generally upon delivery according to contractual shipping terms within customer purchase orders. The Company also enters into rebate agreements with certain customers. These agreements may be considered an additional performance obligation of the Company or variable consideration within a contract. Rebates are recorded as a reduction of revenue in the period the related product revenue is recognized. A corresponding liability is recorded as a component of deferred revenue on the consolidated balance sheets. These arrangements are primarily based on the customer attaining contractually specified sales volumes. The Company estimates the amount of its product sales that may be returned by its customers and records this estimate as a reduction of revenue in the period the related product revenue is recognized. The Company currently estimates product return liabilities using historical rates of return, current quarter credit sales, and specific items of exposure on a contract-by-contract basis. Sales return reserves were approximately $0.1 million at both September 30, 2019 and December 31, 2018. Subsea Projects The Company manufactures and sells subsea products that are designed for pipe-in-pipe applications in offshore oil production and are typically customized to meet customer specifications. Subsea products typically have no alternative use and contain an enforceable right to payment. Customer invoicing terms for subsea products are typically based on certain milestones within the production and delivery schedule. Under the provisions of ASC 606, the Company recognizes revenue at a point in time when transfer of control of the products is passed to the customer, or over time utilizing the input/cost-to-cost method. The timing of revenue recognition is assessed on a contract-by-contract basis. During the nine months ended September 30, 2019 and 2018, the Company recognized revenue of $14.4 million and $2.4 million, respectively, in connection with subsea projects. Research Services The Company performs research services under contracts with various government agencies and other institutions. These contracts generally have one type of performance obligation associated with the provision of research services including functional licenses to any resulting intellectual property. The Company records revenue 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 the research. Typically, the only deliverable, other than the labor hours expended, is reporting research results to the customer or delivery of research grade aerogel products. 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 toward 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 within the period they become known. To date, adjustments to revenue as a result of contracting agency audits have been insignificant. |
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Leases |
Leases On January 1, 2019, the Company adopted Accounting Standards Update (ASU) 2016-02, Leases (Topic 842). See note 8 for further details. On January 1, 2019, the Company adopted ASU 2016-02 which modifies the accounting for leases and requires that all leases be recorded on the consolidated balance sheets as assets and liabilities. The Company adopted this standard using the modified retrospective transition approach with the effective date as the date of initial application. As a result, the Company did not update financial information or provide the disclosures otherwise required under the new standard for dates and periods before January 1, 2019. The Company also elected the package of practical expedients under the new standard, which permits the Company to not reassess prior conclusions about lease identification, lease classification, and initial direct costs. In addition, the Company elected the short-term lease recognition exemption under which the Company will not recognize ROU assets or lease liabilities for all leases that qualify. The Company also elected the practical expedient to not separate non-lease components from the associated lease components for all of its equipment leases. The Company determines if an arrangement is a lease at inception. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s payment obligations under the lease. Operating lease ROU assets and liabilities are recognized based on the present value of lease payments over the lease term. To measure its lease liabilities, the Company uses its incremental borrowing rate or the rate implicit in the lease, if available. ROU assets also include any direct costs and prepaid lease payments but exclude any lease incentives received. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company elected the short-term lease recognition exemption for all leases that qualify. For leases that qualify for this exemption, the Company does not recognize ROU assets or lease liabilities. For lease agreements with lease and non-lease components, the Company accounts for each component separately. However, in the case of equipment leases, the Company accounts for lease and non-lease components as a single component. Prior to the Company’s adoption of ASU 2016-02, the Company recorded the difference between rent expense recognized on a straight-line basis and the contractual payments as deferred rent. |
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Stock-based Compensation |
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 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 nature of the conditions, the expected volatility of the underlying security, and other relevant factors. During the nine months ended September 30, 2019, the Company granted 50,328 shares of restricted common stock with a grant date fair value of $0.3 million and non-qualified options (NSOs) to purchase 71,700 shares of common stock with a grant date fair value of $0.2 million 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 nine months ended September 30, 2019, the Company granted 654,582 restricted common stock units (RSUs) with a grant date fair value of $2.4 million and NSOs to purchase 632,183 shares of common stock with a grant date fair value of $1.1 million to employees under the 2014 Equity Plan. The RSUs and NSOs granted to employees will vest over a three-year period. During the nine months ended September 30, 2019, the Company also granted NSOs to purchase 20,000 shares of common stock under the 2014 Equity Plan to an outside consultant which will vest on March 26, 2020 with a grant date fair value of less than $0.1 million. Stock-based compensation is included in cost of revenue or operating expenses, as applicable, and consists of the following:
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 479,470 shares to 7,488,930 shares effective January 1, 2019. As of September 30, 2019, 4,703,199 shares of common stock were reserved for issuance upon the exercise or vesting of outstanding stock-based awards granted under the 2014 Equity Plan. In addition, as of September 30, 2019, 86,074 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 September 30, 2019, the Company has either issued or reserved in connection with statutory tax withholdings a total of 1,782,795 shares under the 2014 Equity Plan. As of September 30, 2019, there were 916,862 shares of common stock available for future grant under the 2014 Equity Plan. |
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Net Loss per Share |
Net Loss 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 loss gives effect to all potentially dilutive common equivalent shares, including outstanding stock options, and RSUs. Common equivalent shares are excluded from the computation of diluted net loss per share if their effect is antidilutive. |
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Segments |
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:
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Warranty |
Warranty The Company provides warranties for its products and records the estimated cost within cost of revenue 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 involve new technical demands and new configurations. Accordingly, the Company regularly reviews and assesses whether warranty reserves should be recorded in the period the related revenue is recorded. For an initial shipment of product for use in a system with new technical demands or new 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. The Company did not record any warranty expense during the nine months ended September 30, 2019 and 2018. As of September 30, 2019, the Company had satisfied all warranty claims. |
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Recently Issued Accounting Standards |
Recently Issued Accounting Standards From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (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, 2018 In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). FASB ASU 2016-02 modified the accounting for leases and requires that all leases be recorded on the consolidated balance sheets as assets and liabilities. This standard was effective for fiscal years beginning after December 15, 2018. The Company adopted this standard on January 1, 2019 using the modified retrospective transition approach with the effective date as the date of initial application. As a result, the Company did not update financial information or provide the disclosures otherwise required under the new standard for dates and periods before January 1, 2019. To measure its lease liabilities, the Company used its incremental borrowing rate as of the date of adoption or the rate implicit in the lease, if available. The discount rate was applied to the remaining lease term and remaining payments at the date of adoption. The Company also elected the package of practical expedients under the new standard, which permitted the Company to not reassess prior conclusions about lease identification, lease classification, and initial direct costs. The most significant effects of this new standard on the consolidated financial statements related to the recognition of new right-of-use (ROU) assets and lease liabilities on the consolidated balance sheets and the provision of significant new disclosures about leasing activities. Upon adoption on January 1, 2019, the Company recognized operating lease liabilities of approximately $6.0 million with corresponding ROU assets of approximately $4.6 million. Additionally, the Company derecognized deferred rent liabilities of $1.4 million. This standard has not materially impacted the Company’s consolidated net loss or net cash used in operations. The Company also elected the short-term lease recognition exemption for all leases that qualify. For leases that qualify for this exemption, the Company does not recognize ROU assets or lease liabilities. In addition, the Company elected the practical expedient to not separate non-lease components from the associated lease components for all of its equipment leases. Standards to be Implemented The Company believes that the impact of recently issued accounting standards that are not yet effective will not have a material impact on its consolidated financial statements. |
Significant Accounting Policies (Tables) |
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Summary of Stock Based Compensation Included in Cost of Revenue or Operating Expenses | Stock-based compensation is included in cost of revenue or operating expenses, as applicable, and consists of the following:
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Schedule of Revenues, Based on Shipment Destination or Research Services Location |
Information about the Company’s total revenues, based on shipment destination or services location, is presented in the following table:
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Revenue from Contracts with Customers (Tables) |
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Revenue From Contract With Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Revenue Disaggregated by Geographical Region and Source of Revenue |
In the following tables, revenue is disaggregated by primary geographical region and source of revenue:
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Summary of Changes in Contract Assets and Contract Liabilities |
The following table presents changes in the Company’s contract assets and contract liabilities during the nine months ended September 30, 2019:
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Inventories (Tables) |
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Schedule of Inventories |
Inventories consist of the following:
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Property, Plant and Equipment, Net (Tables) |
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Summary of Property, Plant and Equipment |
Property, plant and equipment consist of the following:
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Accrued Expenses (Tables) |
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Schedule of Accrued Expenses |
Accrued expenses consist of the following:
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Leases (Tables) |
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Summary of Deferred Rent | Deferred rent consisted of the following at December 31, 2018:
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Summary of Maturities of Operating Lease Liabilities | Maturities of operating lease liabilities at September 30, 2019 are as follows:
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Net Loss Per Share (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Basic and Diluted Net Loss Per Share |
The computation of basic and diluted net loss per share consists of the following:
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Summary of Potentially Dilutive Common Shares Excluded from Computation of Diluted Net Loss Per Share |
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:
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Description of Business and Basis of Presentation - Additional Information (Detail) $ in Thousands |
3 Months Ended | 9 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019
USD ($)
|
Jun. 30, 2019
USD ($)
|
Mar. 31, 2019
USD ($)
|
Sep. 30, 2018
USD ($)
|
Jun. 30, 2018
USD ($)
|
Mar. 31, 2018
USD ($)
|
Sep. 30, 2019
USD ($)
Subsidiary
|
Sep. 30, 2018
USD ($)
|
Dec. 31, 2018
USD ($)
|
|
Basis Of Presentation [Line Items] | |||||||||
Number of Subsidiaries | Subsidiary | 3 | ||||||||
Net loss incurred | $ 2,289 | $ 5,318 | $ 6,002 | $ 6,532 | $ 6,958 | $ 6,842 | $ 13,609 | $ 20,332 | |
Cash used in operations | 5,761 | $ 8,740 | |||||||
Cash and cash equivalents | 1,195 | 1,195 | $ 3,327 | ||||||
Outstanding borrowings under revolving line of credit | 4,863 | 4,863 | $ 4,181 | ||||||
Revolving Credit Facility [Member] | |||||||||
Basis Of Presentation [Line Items] | |||||||||
Outstanding borrowings under revolving line of credit | 4,900 | 4,900 | |||||||
Additional amount available under revolving line of credit | $ 7,600 | $ 7,600 | |||||||
Existing maturity date | Apr. 28, 2020 |
Significant Accounting Policies - Schedule of Revenues, Based on Shipment Destination or Research Services Location (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Segment Reporting Information [Line Items] | ||||
Revenue | $ 35,425 | $ 23,937 | $ 92,870 | $ 68,682 |
U.S. [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 15,191 | 11,485 | 41,415 | 30,677 |
International [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | $ 20,234 | $ 12,452 | $ 51,455 | $ 38,005 |
Revenue from Contracts with Customers - Additional Information (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2019
USD ($)
|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2019
USD ($)
Agreement
|
Sep. 30, 2018
USD ($)
|
Dec. 31, 2018
USD ($)
|
|
Revenue Recognition [Line Items] | |||||
Revenue | $ 35,425 | $ 23,937 | $ 92,870 | $ 68,682 | |
Deferred revenue, revenue recognized | 1,900 | ||||
Maximum [Member] | |||||
Revenue Recognition [Line Items] | |||||
Sales return reserves | 100 | $ 100 | $ 100 | ||
Product Revenue [Member] | |||||
Revenue Recognition [Line Items] | |||||
Number of performance obligations | Agreement | 1 | ||||
Revenue | 33,098 | 21,751 | $ 76,312 | 64,543 | |
Subsea Projects [Member] | |||||
Revenue Recognition [Line Items] | |||||
Revenue | 1,948 | 1,591 | $ 14,427 | 2,435 | |
Research Services [Member] | |||||
Revenue Recognition [Line Items] | |||||
Number of performance obligations | Agreement | 1 | ||||
Revenue | $ 379 | $ 595 | $ 2,131 | $ 1,704 |
Inventories - Schedule of Inventories (Detail) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 4,196 | $ 3,159 |
Finished goods | 9,263 | 4,159 |
Total | $ 13,459 | $ 7,318 |
Property, Plant and Equipment, Net - Additional Information (Detail) - USD ($) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Dec. 31, 2018 |
|
Property Plant and Equipment [Line Items] | |||
Depreciation expense | $ 7,700 | $ 8,300 | |
Property, plant and equipment, gross | 155,386 | $ 154,402 | |
Construction in Progress [Member] | |||
Property Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 467 | 1,568 | |
Rhode Island [Member] | Construction in Progress [Member] | |||
Property Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | $ 100 | $ 1,200 |
Accrued Expenses - Schedule of Accrued Expenses (Detail) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Accrued Liabilities Current [Abstract] | ||
Employee compensation | $ 2,733 | $ 2,750 |
Other accrued expenses | 1,806 | 1,114 |
Total | $ 4,539 | $ 3,864 |
Leases - Additional Information (Detail) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2019 |
Jan. 01, 2019 |
|
Leases [Abstract] | ||
Operating lease expiry year | 2026 | |
Operating lease liabilities | $ 5,605 | $ 6,000 |
ROU assets | 4,277 | 4,600 |
Deferred rent credit de-recognized | $ 1,400 | |
Operating lease cost | 1,200 | |
Cash payments related to operating lease liabilities | $ 1,100 | |
Operating lease, weighted average remaining lease term | 5 years 7 months 6 days | |
Operating lease, weighted average discount rate, percent | 7.90% |
Leases - Summary of Deferred Rent (Detail) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Deferred Revenue And Credits [Abstract] | |
Deferred rent | $ 1,368 |
Current maturities of deferred rent | (150) |
Deferred rent, less current maturities | $ 1,218 |
Leases - Summary of Maturities of Operating Lease Liabilities (Detail) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Jan. 01, 2019 |
---|---|---|
Leases [Abstract] | ||
2019 (excluding the nine months ended September 30, 2019) | $ 380 | |
2020 | 1,413 | |
2021 | 1,221 | |
2022 | 1,138 | |
2023 | 1,105 | |
Thereafter | 1,700 | |
Total lease payments | 6,957 | |
Less imputed interest | (1,352) | |
Operating lease liabilities | $ 5,605 | $ 6,000 |
Net Loss Per Share - Computation of Basic and Diluted Net Loss Per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Numerator: | ||||||||
Net loss | $ (2,289) | $ (5,318) | $ (6,002) | $ (6,532) | $ (6,958) | $ (6,842) | $ (13,609) | $ (20,332) |
Denominator: | ||||||||
Weighted average shares outstanding, basic and diluted | 24,171,811 | 23,808,703 | 24,074,565 | 23,707,245 | ||||
Net loss per share, basic and diluted | $ (0.09) | $ (0.27) | $ (0.57) | $ (0.86) |
Net Loss Per Share - Summary of Potentially Dilutive Common Shares Excluded from Computation of Diluted Net Loss Per Share (Detail) - shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive Securities | 4,917,726 | 4,051,866 | 4,917,726 | 4,051,866 |
Common Stock Options [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive Securities | 3,683,858 | 2,994,452 | 3,683,858 | 2,994,452 |
Restricted Common Stock Units [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive Securities | 1,105,415 | 921,227 | 1,105,415 | 921,227 |
Restricted Common Stock Awards [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive Securities | 128,453 | 136,187 | 128,453 | 136,187 |