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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number: 001-36481

 

ASPEN AEROGELS, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

04-3559972

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

30 Forbes Road, Building B

Northborough, Massachusetts

 

01532

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (508691-1111

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of exchange on which registered

Common Stock, par value $0.00001 per share

ASPN

The New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.         Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).        Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

Non-accelerated filer

 

  

  

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of November 5, 2020, the registrant had 26,867,920 shares of common stock outstanding.

 

 


ASPEN AEROGELS, INC.

INDEX TO FORM 10-Q

 

 

 

 

 

Page

 

 

PART I FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Financial Statements

 

 

 

 

 

 

 

 

 

Consolidated Balance Sheets (unaudited) as of September 30, 2020 and December 31, 2019

 

1

 

 

 

 

 

 

 

Consolidated Statements of Operations (unaudited) for the three and nine months ended September 30, 2020 and 2019

 

2

 

 

 

 

 

 

 

Consolidated Statements of Stockholders’ Equity (unaudited) for the three and nine months ended September 30, 2020 and 2019

 

3

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2020 and 2019

 

4

 

 

 

 

 

 

 

Notes to Consolidated Financial Statements (unaudited)

 

5

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

17

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

33

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

34

 

 

 

 

 

 

 

PART II OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

36

 

 

 

 

 

Item 1A.

 

Risk Factors

 

37

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

40

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

40

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

40

 

 

 

 

 

Item 5.

 

Other Information

 

40

 

 

 

 

 

Item 6.

 

Exhibits

 

42

 

 

 

 

 

SIGNATURES

 

43

 

Trademarks, Trade Names and Service Marks

We own or have rights to use “Aspen Aerogels,” “Cryogel,” “Pyrogel,” “Spaceloft,” “PyroThin,” the Aspen Aerogels logo and other trademarks, service marks and trade names of Aspen Aerogels, Inc. appearing in this Quarterly Report on Form 10-Q. Solely for convenience, the trademarks, service marks and trade names referred to in this report are presented without the ® and TM symbols, but such references are not intended to indicate, in any way, that the owner thereof will not assert, to the fullest extent under applicable law, such owner’s rights to these trademarks, service marks and trade names. This report contains additional trademarks, service marks and trade names of other companies, which, to our knowledge, are the property of their respective owners.

 

 

 


 

PART I — FINANCIAL INFORMATION

Item 1.

Financial Statements.

ASPEN AEROGELS, INC.

Consolidated Balance Sheets

(Unaudited)

 

 

 

September 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

 

(In thousands, except

share and per share data)

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

11,314

 

 

$

3,633

 

Accounts receivable, net of allowances of $295 and $144

 

 

20,072

 

 

 

32,254

 

Inventories

 

 

9,427

 

 

 

8,768

 

Prepaid expenses and other current assets

 

 

1,595

 

 

 

1,114

 

Total current assets

 

 

42,408

 

 

 

45,769

 

Property, plant and equipment, net

 

 

48,099

 

 

 

53,617

 

Operating lease right-of-use assets

 

 

3,702

 

 

 

4,032

 

Other long-term assets

 

 

88

 

 

 

84

 

Total assets

 

$

94,297

 

 

$

103,502

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

8,354

 

 

$

12,596

 

Accrued expenses

 

 

4,081

 

 

 

8,057

 

Current portion of long-term debt

 

 

367

 

 

 

 

Revolving line of credit

 

 

 

 

 

3,123

 

Deferred revenue

 

 

2,275

 

 

 

5,620

 

Operating lease liabilities

 

 

1,056

 

 

 

1,038

 

Total current liabilities

 

 

16,133

 

 

 

30,434

 

Prepayment liability

 

 

9,568

 

 

 

9,786

 

Long-term debt

 

 

3,298

 

 

 

 

Operating lease liabilities long-term

 

 

3,845

 

 

 

4,292

 

Other long-term liabilities

 

 

566

 

 

 

 

Total liabilities

 

 

33,410

 

 

 

44,512

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.00001 par value; 5,000,000 shares authorized, no shares issued and

   outstanding at September 30, 2020 and December 31, 2019

 

 

 

 

 

 

Common stock, $0.00001 par value; 125,000,000 shares authorized, 26,865,309 and

   24,302,504 shares issued and outstanding at September 30, 2020 and December 31,

   2019, respectively

 

 

 

 

 

 

Additional paid-in capital

 

 

562,657

 

 

 

545,140

 

Accumulated deficit

 

 

(501,770

)

 

 

(486,150

)

Total stockholders’ equity

 

 

60,887

 

 

 

58,990

 

Total liabilities and stockholders’ equity

 

$

94,297

 

 

$

103,502

 

 

See accompanying notes to unaudited consolidated financial statements.

1


 

ASPEN AEROGELS, INC.

Consolidated Statements of Operations

(Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

(In thousands, except

share and per share data)

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

23,939

 

 

$

35,046

 

 

$

76,772

 

 

$

90,739

 

Research services

 

 

256

 

 

 

379

 

 

 

483

 

 

 

2,131

 

Total revenue

 

 

24,195

 

 

 

35,425

 

 

 

77,255

 

 

 

92,870

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

 

22,243

 

 

 

27,510

 

 

 

66,403

 

 

 

76,703

 

Research services

 

 

52

 

 

 

173

 

 

 

121

 

 

 

1,193

 

Gross profit

 

 

1,900

 

 

 

7,742

 

 

 

10,731

 

 

 

14,974

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

2,088

 

 

 

2,046

 

 

 

6,436

 

 

 

5,842

 

Sales and marketing

 

 

2,755

 

 

 

3,992

 

 

 

9,051

 

 

 

11,012

 

General and administrative

 

 

3,761

 

 

 

3,857

 

 

 

10,682

 

 

 

11,449

 

Total operating expenses

 

 

8,604

 

 

 

9,895

 

 

 

26,169

 

 

 

28,303

 

Loss from operations

 

 

(6,704

)

 

 

(2,153

)

 

 

(15,438

)

 

 

(13,329

)

Interest expense, net

 

 

(49

)

 

 

(136

)

 

 

(182

)

 

 

(280

)

Total interest expense, net

 

 

(49

)

 

 

(136

)

 

 

(182

)

 

 

(280

)

Net loss

 

$

(6,753

)

 

$

(2,289

)

 

$

(15,620

)

 

$

(13,609

)

Net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.25

)

 

$

(0.09

)

 

$

(0.60

)

 

$

(0.57

)

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

26,728,205

 

 

 

24,171,811

 

 

 

26,150,236

 

 

 

24,074,565

 

 

See accompanying notes to unaudited consolidated financial statements.

2


 

ASPEN AEROGELS, INC.

Consolidated Statements of Stockholders’ Equity

(Unaudited)

(In thousands, except share data)

 

 

 

Preferred Stock

$0.00001 Par

Value

 

 

Common Stock

$0.00001 Par

Value

 

 

Additional

Paid-in

Capital

 

 

Accumulated

Deficit

 

 

Total Stockholders' Equity

 

 

 

Shares

 

 

Value

 

 

Shares

 

 

Value

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2019

 

 

 

 

$

 

 

 

24,302,504

 

 

$

 

 

$

545,140

 

 

$

(486,150

)

 

$

58,990

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,169

)

 

 

(3,169

)

Stock compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

992

 

 

 

 

 

 

992

 

Vesting of restricted stock units

 

 

 

 

 

 

 

 

336,951

 

 

 

 

 

 

(1,195

)

 

 

 

 

 

(1,195

)

Proceeds from underwritten public offering, net of underwriting discounts and commissions of $1,093 and issuance costs of $285

 

 

 

 

 

 

 

 

1,955,000

 

 

 

 

 

 

14,751

 

 

 

 

 

 

14,751

 

Balance at March 31, 2020

 

 

 

 

 

 

 

 

26,594,455

 

 

 

 

 

 

559,688

 

 

 

(489,319

)

 

 

70,369

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,698

)

 

 

(5,698

)

Stock compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,007

 

 

 

 

 

 

1,007

 

Issuance of restricted stock

 

 

 

 

 

 

 

 

45,066

 

 

 

 

 

 

 

 

 

 

 

 

 

Vesting of restricted stock units

 

 

 

 

 

 

 

 

5,629

 

 

 

 

 

 

(16

)

 

 

 

 

 

(16

)

Proceeds from employee stock option exercises

 

 

 

 

 

 

 

 

200,159

 

 

 

 

 

 

869

 

 

 

 

 

 

869

 

Balance at June 30, 2020

 

 

 

 

 

 

 

 

26,845,309

 

 

 

 

 

 

561,548

 

 

 

(495,017

)

 

 

66,531

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,753

)

 

 

(6,753

)

Stock compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

991

 

 

 

 

 

 

991

 

Proceeds from employee stock option exercises

 

 

 

 

 

 

 

 

20,000

 

 

 

 

 

 

118

 

 

 

 

 

 

118

 

Balance at September 30, 2020

 

 

 

 

$

 

 

 

26,865,309

 

 

$

 

 

$

562,657

 

 

$

(501,770

)

 

$

60,887

 

 

 

 

Preferred Stock

$0.00001 Par

Value

 

 

Common Stock

$0.00001 Par

Value

 

 

Additional

Paid-in

Capital

 

 

Accumulated

Deficit

 

 

Total Stockholders' Equity

 

 

 

Shares

 

 

Value

 

 

Shares

 

 

Value

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2018

 

 

 

 

$

 

 

 

23,973,517

 

 

$

 

 

$

541,839

 

 

$

(471,585

)

 

$

70,254

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,002

)

 

 

(6,002

)

Stock compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

878

 

 

 

 

 

 

878

 

Vesting of restricted stock units

 

 

 

 

 

 

 

 

273,290

 

 

 

 

 

 

(454

)

 

 

 

 

 

(454

)

Balance at March 31, 2019

 

 

 

 

 

 

 

 

24,246,807

 

 

 

 

 

 

542,263

 

 

 

(477,587

)

 

 

64,676

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,318

)

 

 

(5,318

)

Stock compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

996

 

 

 

 

 

 

996

 

Issuance of restricted stock

 

 

 

 

 

 

 

 

50,328

 

 

 

 

 

 

 

 

 

 

 

 

 

Vesting of restricted stock units

 

 

 

 

 

 

 

 

3,129

 

 

 

 

 

 

(10

)

 

 

 

 

 

(10

)

Balance at June 30, 2019

 

 

 

 

 

 

 

 

24,300,264

 

 

 

 

 

 

543,249

 

 

 

(482,905

)

 

 

60,344

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,289

)

 

 

(2,289

)

Stock compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,011

 

 

 

 

 

 

1,011

 

Balance at September 30, 2019

 

 

 

 

$

 

 

 

24,300,264

 

 

$

 

 

$

544,260

 

 

$

(485,194

)

 

$

59,066

 

 

See accompanying notes to unaudited consolidated financial statements.

 

3


 

ASPEN AEROGELS, INC.

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2020

 

 

2019

 

 

 

(In thousands)

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(15,620

)

 

$

(13,609

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

7,670

 

 

 

7,651

 

Amortization of debt issuance costs

 

 

6

 

 

 

 

Provision for bad debt

 

 

171

 

 

 

 

Stock-compensation expense

 

 

2,990

 

 

 

2,885

 

Reduction in the carrying amount of operating lease right-of-use assets

 

 

719

 

 

 

702

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

12,011

 

 

 

1,203

 

Inventories

 

 

(659

)

 

 

(6,141

)

Prepaid expenses and other assets

 

 

(485

)

 

 

(484

)

Accounts payable

 

 

(3,794

)

 

 

(2,865

)

Accrued expenses

 

 

(3,976

)

 

 

826

 

Deferred revenue

 

 

(3,563

)

 

 

4,870

 

Operating lease liabilities

 

 

(818

)

 

 

(743

)

Other liabilities

 

 

566

 

 

 

(56

)

Net cash used in operating activities

 

 

(4,782

)

 

 

(5,761

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(2,600

)

 

 

(1,589

)

Net cash used in investing activities

 

 

(2,600

)

 

 

(1,589

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from underwritten public offering, net of underwriting discounts and commissions of $1,093

 

 

15,036

 

 

 

 

Issuance costs from underwritten public offering

 

 

(285

)

 

 

 

Proceeds from issuance of long-term debt

 

 

3,686

 

 

 

 

Issuance costs from long-term debt

 

 

(27

)

 

 

 

Proceeds from (repayments of) borrowings under line of credit, net

 

 

(3,123

)

 

 

682

 

Prepayment proceeds under customer supply agreement

 

 

 

 

 

5,000

 

Proceeds from employee stock option exercises

 

 

987