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(1) Description of Business and Basis of Presentation
Nature of Business
Aspen Aerogels, Inc. (the Company) is an energy technology company that designs, develops and manufactures innovative, high-performance aerogel insulation. 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 two wholly owned subsidiaries: Aspen Aerogels Rhode Island, LLC and Aspen Aerogels Germany, GmbH.
On June 18, 2014, the Company completed an initial public offering (IPO) of 7,500,000 shares of its common stock at a public offering price of $11.00 per share. The Company received net proceeds of $74.7 million after deducting underwriting discounts and commissions of $4.3 million and offering expenses of approximately $3.5 million. Upon the closing of the offering, all of the Company’s then-outstanding (i) warrants to purchase Series C preferred stock (the “Series C warrants”) were subject to an automatic net cashless exercise, (ii) convertible preferred stock (including the shares of Series C preferred stock issued upon the automatic net cashless exercise of Series C warrants) automatically converted into 115,982 shares of common stock, and (iii) Convertible Notes and Senior Convertible Notes (see note 7) automatically converted into 15,319,034 shares of common stock.
Prior to the closing of the offering, the Company completed a 1-for-824.7412544 reverse stock split of its common stock. All common shares and related per share amounts in the financial statements and notes have been adjusted retroactively to reflect the reverse stock split.
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, 2014 (the Annual Report), filed with the Securities and Exchange Commission on March 13, 2015.
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 March 31, 2015 and the results of its operations and cash flows for the three months ended March 31, 2015 and 2014. The Company has evaluated events through the date of this filing.
The results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results to be expected for the year ending December 31, 2015 or any other period.
There have been no changes to our significant accounting policies described in the Annual Report that have had a material impact on our consolidated financial statements and notes thereto.
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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(2) Significant Accounting Policies
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, inventory valuation, the carrying amount of property and equipment, fair value of debt and capital stock, 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 it believes to be reasonable under the circumstances. Management adjusts such estimates and assumptions when facts and circumstances dictate. Illiquid credit markets, volatile equity markets and declines in business investment increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods.
Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid instruments, which consist of money market accounts. All cash and cash equivalents are maintained with major financial institutions in North America. Deposits with these financial institutions may exceed the amount of insurance provided on such deposits; however, these deposits typically may be redeemed upon demand and, therefore, bear minimal risk.
Marketable Securities
Marketable securities consist primarily of marketable debt securities which are classified as available-for-sale and are carried at fair value at March 31, 2015. The Company held no marketable securities at December 31, 2014. The unrealized gains and losses on available-for-sale securities are recorded in accumulated other comprehensive income (loss). The Company considers all highly liquid investments with maturities of 90 days or less at the time of purchase to be cash equivalents, and investments with maturities of greater than 90 days at the time of purchase to be marketable securities. When a marketable security incurs a significant unrealized loss for a sustained period of time, the Company will review the instrument to determine if it is other-than-temporarily impaired. If it is determined that an instrument is other-than-temporarily impaired, the Company will record the unrealized loss in the consolidated statement of operations.
The following table classifies our marketable securities by contractual maturities as of March 31, 2015 (in thousands):
Description | Fair Value | |||
Due in one year or less |
$ | 2,501 | ||
Due in more than one year |
— | |||
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Total marketable securities |
$ | 2,501 | ||
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Accumulated Other Comprehensive Income (Loss)
Accumulated other comprehensive income (loss) consists of changes in the fair market value of available-for-sale securities. As of March 31, 2015, amortized cost of available-for-sale securities approximated fair value.
Fair Value of Financial Instruments
Fair value is an exit price that represents the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. Accordingly, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The Company discloses the manner in which fair value is determined for assets and liabilities based on a three-tiered fair value hierarchy. The hierarchy ranks the quality and reliability of the information used to determine the fair values. The three levels of inputs described in the standard are:
Level 1: |
Quoted prices in active markets for identical assets or liabilities. | |
Level 2: |
Observable inputs, other than Level 1 prices, for the assets or liabilities, either directly or indirectly, for substantially the full term of the assets or liabilities. | |
Level 3: |
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
Under the Fair Value Option Subsections of Financial Accounting Standards Board (FASB) ASC Subtopic 825-10, Financial Instruments — Overall, the Company has the irrevocable option to report most financial assets and financial liabilities at fair value on an instrument by instrument basis, with changes in fair value reported in earnings each reporting period. As a result of electing this option, the Company recorded its previously outstanding Subordinated Notes, Senior Convertible Notes and Convertible Notes at fair value in order to measure these liabilities at amounts that more accurately reflect the economics of these instruments (see note 7).
During the three month period ended March 31, 2014, the Company valued its then outstanding Subordinated Notes, Senior Convertible Notes and Convertible Notes utilizing Level 3 inputs.
Upon the completion of the Company’s IPO discussed in note 1, the Company used a portion of the net proceeds to settle all obligations under the Subordinated Notes in full, and the Senior Convertible Notes and Convertible Notes automatically converted into 15,319,034 shares of common stock.
At March 31, 2015, the Company held marketable debt securities classified as available-for-sale securities totaling $2.5 million, which were valued utilizing Level 1 inputs. The Company held no marketable securities at December 31, 2014.
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.
In March 2015, the Company issued 219,944 restricted common stock units (RSUs) and non-qualified stock options (NSOs) to purchase 231,223 shares of common stock to employees under the 2014 Employee, Director and Consultant Equity Incentive Plan (the 2014 Equity Plan). The RSUs and NSOs will vest over a three year period. Pursuant to the “evergreen” provisions of the 2014 Equity Plan, the number of shares of common stock available for issuance under the plan automatically increased to 3,698,257 shares effective January 1, 2015.
Earnings per Share
The Company calculates net loss per common share based on the weighted-average number of common shares outstanding during each period. Potential common stock equivalents are determined using the treasury stock method. The weighted-average number of common shares included in the computation of diluted net loss gives effect to all potentially dilutive common equivalent shares, including outstanding stock options, restricted common stock units and warrants. 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 discrete financial information is available for evaluation by the chief operating decision maker when 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 revenues, based on shipment destination or services location, is presented in the following table:
Three Months Ended March 31, |
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2015 | 2014 | |||||||
(In thousands) | ||||||||
Revenue: |
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U.S. |
$ | 10,684 | $ | 10,650 | ||||
International |
12,816 | 11,713 | ||||||
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Total |
$ | 23,500 | $ | 22,363 | ||||
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Recently Issued Accounting Standards
From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.
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(3) Fair Value Measurements
Fair Value Measurement at Reporting Date Using |
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Description |
March 31, 2015 |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
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(In thousands) |
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Marketable securities: |
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U.S. corporate bonds |
$ | 1,003 | $ | 1,003 | $ | — | $ | — | ||||||||
Foreign corporate bonds |
1,498 | 1,498 | — | — | ||||||||||||
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Total |
$ | 2,501 | $ | 2,501 | $ | — | $ | — | ||||||||
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As of March 31, 2015, amortized cost available-for-sale securities approximated fair value.
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(4) Inventories
Inventories consist of the following:
March 31, 2015 |
December 31, 2014 |
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(In thousands) | ||||||||
Raw materials |
$ | 4,485 | $ | 4,052 | ||||
Finished goods |
1,420 | 845 | ||||||
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Total |
$ | 5,905 | $ | 4,897 | ||||
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(5) Property, Plant and Equipment, Net
Property, plant and equipment consist of the following:
March 31, 2015 |
December 31, 2014 |
Useful life |
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(In thousands) | ||||||||||
Construction in progress |
$ | 1,654 | $ | 24,124 | — | |||||
Buildings |
23,253 | 16,303 | 30 years | |||||||
Machinery and equipment |
102,939 | 78,378 | 3-10 years | |||||||
Computer equipment and software |
6,681 | 5,556 | 3 years | |||||||
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Total |
134,527 | 124,361 | ||||||||
Accumulated depreciation |
(55,007 | ) | (52,869 | ) | ||||||
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Property, plant and equipment, net |
$ | 79,520 | $ | 71,492 | ||||||
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Depreciation expense was $2.2 million and $2.6 million for the three months ended March 31, 2015 and 2014, respectively.
Construction in progress totaled $1.7 million and $24.1 million at March 31, 2015 and December 31, 2014, respectively. In March 2015, the Company placed into service approximately $31.8 million of assets related to the Company’s completed third production line at its manufacturing facility in East Providence, RI.
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(6) Accrued Expenses
Accrued expenses consist of the following:
March 31, 2015 |
December 31, 2014 |
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(In thousands) | ||||||||
Employee compensation |
$ | 2,408 | $ | 4,851 | ||||
Professional fees |
165 | 76 | ||||||
Deferred rent |
168 | 155 | ||||||
Other accrued expenses |
584 | 506 | ||||||
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Total |
$ | 3,325 | $ | 5,588 | ||||
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(7) Interest Expense
Interest expense consists of the following:
Three Months Ended March 31, |
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2015 | 2014 | |||||||
(In thousands) | ||||||||
Changes in fair value: |
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Subordinated Notes |
$ | — | $ | 796 | ||||
Senior Convertible Notes |
— | 3,535 | ||||||
Convertible Notes, net of capitalization |
— | 11,740 | ||||||
Debt closing costs |
— | 17 | ||||||
Other interest |
45 | 63 | ||||||
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Total |
$ | 45 | $ | 16,151 | ||||
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As of March 31, 2014, the Company had Subordinated Notes, Senior Convertible Notes and Convertible Notes outstanding that were measured at fair value utilizing level 3 inputs.
The change in fair value of the Subordinated Notes for the three months ended March 31, 2014 was determined by utilizing a probability weighted discounted cash flow analysis of the amount to be paid on the notes upon the occurrence of certain events in which the Subordinated Notes would be repaid to the noteholders in cash. This analysis utilized assumptions related to the probability of the occurrence of each of the various events and appropriate discount rates for each of the scenarios.
The change in the fair value of the Senior Convertible Notes and the Convertible Notes for the three months ended March 31, 2014 was determined by utilizing a probability weighted discounted cash flow analysis which took into consideration market and general economic events as well as the Company’s financial results and other data available as of that date. This analysis determined the amount to be paid on the notes in either cash or shares at the occurrence of certain events in which the Senior Convertible Notes and the Convertible Notes would be converted into shares of the Company’s common stock or would be repaid to the noteholders in cash. This analysis also utilized assumptions related to the probability of the occurrence of each of the various events and appropriate discount rates for each of the scenarios.
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(8) Revolving Line of Credit
The Company maintains a revolving credit facility with Silicon Valley Bank. On September 3, 2014, the Company amended and restated the loan and security agreement to extend the maturity date of the facility to August 31, 2016 and increase the maximum amount the Company is permitted to borrow, subject to continued covenant compliance and borrowing base requirements, from $10 million to $20 million. At the Company’s election, the interest rate applicable to borrowings under the revolving credit facility may be based on the prime rate or LIBOR. Prime rate-based rates vary from prime rate plus 0.75% per annum to prime rate plus 1.75% per annum, while LIBOR-based rates vary from LIBOR plus 3.75% per annum to LIBOR plus 4.25% per annum. In addition, the Company is required to pay a monthly unused revolving line facility fee of 0.5% per annum of the average unused portion of the revolving credit facility. The revolving credit facility is secured by a first priority security interest in all assets of the Company, including those at the East Providence facility, except for certain exclusions.
At both March 31, 2015 and December 31, 2014, the Company had no amounts drawn on the revolving credit facility. The Company had outstanding letters of credit backed by the revolving credit facility of $1.4 million at March 31, 2015 and December 31, 2014, respectively, which reduce the funds otherwise available to the Company. Based on the available borrowing base, the effective amount available to the Company under the revolving credit facility at March 31, 2015 was $10.9 million after consideration of the $1.4 million of outstanding letters of credit (see note 9). Under the revolving credit facility, the Company is required to comply with financial covenants relating to, among other items, minimum Adjusted EBITDA, maximum unfinanced capital expenditures and other non-financial covenants. At March 31, 2015, the Company was in compliance with all such financial covenants.
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(9) Commitments and Contingencies
Letters of Credit
Pursuant to the terms of its Northborough, Massachusetts facility lease, the Company has been required to provide the lessor with letters of credit securing certain obligations. In addition, the Company has been required to provide certain customers with letters of credit securing obligations under commercial contracts.
The Company had letters of credit outstanding of $1.4 million at March 31, 2015 and December 31, 2014, respectively. These letters of credit are secured by the Company’s revolving credit facility (see note 8).
Litigation
The Company is, from time to time, a party to litigation that arises in the normal course of its business operations. 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.
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(11) Income Taxes
The Company incurred net operating losses and recorded a full valuation allowance against net deferred tax assets for all periods presented. Accordingly, the Company has not recorded a provision for federal or state income taxes.
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Nature of Business
Aspen Aerogels, Inc. (the Company) is an energy technology company that designs, develops and manufactures innovative, high-performance aerogel insulation. 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 two wholly owned subsidiaries: Aspen Aerogels Rhode Island, LLC and Aspen Aerogels Germany, GmbH.
On June 18, 2014, the Company completed an initial public offering (IPO) of 7,500,000 shares of its common stock at a public offering price of $11.00 per share. The Company received net proceeds of $74.7 million after deducting underwriting discounts and commissions of $4.3 million and offering expenses of approximately $3.5 million. Upon the closing of the offering, all of the Company’s then-outstanding (i) warrants to purchase Series C preferred stock (the “Series C warrants”) were subject to an automatic net cashless exercise, (ii) convertible preferred stock (including the shares of Series C preferred stock issued upon the automatic net cashless exercise of Series C warrants) automatically converted into 115,982 shares of common stock, and (iii) Convertible Notes and Senior Convertible Notes (see note 7) automatically converted into 15,319,034 shares of common stock.
Prior to the closing of the offering, the Company completed a 1-for-824.7412544 reverse stock split of its common stock. All common shares and related per share amounts in the financial statements and notes have been adjusted retroactively to reflect the reverse stock split.
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, 2014 (the Annual Report), filed with the Securities and Exchange Commission on March 13, 2015.
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 March 31, 2015 and the results of its operations and cash flows for the three months ended March 31, 2015 and 2014. The Company has evaluated events through the date of this filing.
The results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results to be expected for the year ending December 31, 2015 or any other period.
There have been no changes to our significant accounting policies described in the Annual Report that have had a material impact on our consolidated financial statements and notes thereto.
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, inventory valuation, the carrying amount of property and equipment, fair value of debt and capital stock, 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 it believes to be reasonable under the circumstances. Management adjusts such estimates and assumptions when facts and circumstances dictate. Illiquid credit markets, volatile equity markets and declines in business investment increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods.
Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid instruments, which consist of money market accounts. All cash and cash equivalents are maintained with major financial institutions in North America. Deposits with these financial institutions may exceed the amount of insurance provided on such deposits; however, these deposits typically may be redeemed upon demand and, therefore, bear minimal risk.
Marketable Securities
Marketable securities consist primarily of marketable debt securities which are classified as available-for-sale and are carried at fair value at March 31, 2015. The Company held no marketable securities at December 31, 2014. The unrealized gains and losses on available-for-sale securities are recorded in accumulated other comprehensive income (loss). The Company considers all highly liquid investments with maturities of 90 days or less at the time of purchase to be cash equivalents, and investments with maturities of greater than 90 days at the time of purchase to be marketable securities. When a marketable security incurs a significant unrealized loss for a sustained period of time, the Company will review the instrument to determine if it is other-than-temporarily impaired. If it is determined that an instrument is other-than-temporarily impaired, the Company will record the unrealized loss in the consolidated statement of operations.
The following table classifies our marketable securities by contractual maturities as of March 31, 2015 (in millions):
Description | Fair Value | |||
Due in one year or less |
$ | 2,501 | ||
Due in more than one year |
— | |||
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Total marketable securities |
$ | 2,501 | ||
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Accumulated Other Comprehensive Income (Loss)
Accumulated other comprehensive income (loss) consists of changes in the fair market value of available-for-sale securities. As of March 31, 2015, amortized cost of available-for-sale securities approximated fair value.
Fair Value of Financial Instruments
Fair value is an exit price that represents the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. Accordingly, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The Company discloses the manner in which fair value is determined for assets and liabilities based on a three-tiered fair value hierarchy. The hierarchy ranks the quality and reliability of the information used to determine the fair values. The three levels of inputs described in the standard are:
Level 1: |
Quoted prices in active markets for identical assets or liabilities. | |
Level 2: |
Observable inputs, other than Level 1 prices, for the assets or liabilities, either directly or indirectly, for substantially the full term of the assets or liabilities. | |
Level 3: |
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
Under the Fair Value Option Subsections of Financial Accounting Standards Board (FASB) ASC Subtopic 825-10, Financial Instruments — Overall, the Company has the irrevocable option to report most financial assets and financial liabilities at fair value on an instrument by instrument basis, with changes in fair value reported in earnings each reporting period. As a result of electing this option, the Company recorded its previously outstanding Subordinated Notes, Senior Convertible Notes and Convertible Notes at fair value in order to measure these liabilities at amounts that more accurately reflect the economics of these instruments (see note 7).
During the three month period ended March 31, 2014, the Company valued its then outstanding Subordinated Notes, Senior Convertible Notes and Convertible Notes utilizing Level 3 inputs.
Upon the completion of the Company’s IPO discussed in note 1, the Company used a portion of the net proceeds to settle all obligations under the Subordinated Notes in full, and the Senior Convertible Notes and Convertible Notes automatically converted into 15,319,034 shares of common stock.
At March 31, 2015, the Company held marketable debt securities classified as available-for-sale securities totaling $2.5 million, which were valued utilizing Level 1 inputs. The Company held no marketable securities at December 31, 2014.
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.
In March 2015, the Company issued 219,944 restricted common stock units (RSUs) and non-qualified stock options (NSOs) to purchase 231,223 shares of common stock to employees under the 2014 Employee, Director and Consultant Equity Incentive Plan (the 2014 Equity Plan). The RSUs and NSOs will vest over a three year period. Pursuant to the “evergreen” provisions of the 2014 Equity Plan, the number of shares of common stock available for issuance under the plan automatically increased to 3,698,257 shares effective January 1, 2015.
Earnings per Share
The Company calculates net loss per common share based on the weighted-average number of common shares outstanding during each period. Potential common stock equivalents are determined using the treasury stock method. The weighted-average number of common shares included in the computation of diluted net loss gives effect to all potentially dilutive common equivalent shares, including outstanding stock options, restricted common stock units and warrants. 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 discrete financial information is available for evaluation by the chief operating decision maker when 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 revenues, based on shipment destination or services location, is presented in the following table:
Three Months Ended March 31, |
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2015 | 2014 | |||||||
(In thousands) | ||||||||
Revenue: |
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U.S. |
$ | 10,684 | $ | 10,650 | ||||
International |
12,816 | 11,713 | ||||||
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Total |
$ | 23,500 | $ | 22,363 | ||||
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Recently Issued Accounting Standards
From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.
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The following table classifies our marketable securities by contractual maturities as of March 31, 2015 (in thousands):
Description | Fair Value | |||
Due in one year or less |
$ | 2,501 | ||
Due in more than one year |
— | |||
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Total marketable securities |
$ | 2,501 | ||
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Information about the Company’s revenues, based on shipment destination or services location, is presented in the following table:
Three Months Ended March 31, |
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2015 | 2014 | |||||||
(In thousands) | ||||||||
Revenue: |
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U.S. |
$ | 10,684 | $ | 10,650 | ||||
International |
12,816 | 11,713 | ||||||
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Total |
$ | 23,500 | $ | 22,363 | ||||
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Fair Value Measurement at Reporting Date Using |
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Description |
March 31, 2015 |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
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(In thousands) |
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Marketable securities: |
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U.S. corporate bonds |
$ | 1,003 | $ | 1,003 | $ | — | $ | — | ||||||||
Foreign corporate bonds |
1,498 | 1,498 | — | — | ||||||||||||
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Total |
$ | 2,501 | $ | 2,501 | $ | — | $ | — | ||||||||
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Inventories consist of the following:
March 31, 2015 |
December 31, 2014 |
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(In thousands) | ||||||||
Raw materials |
$ | 4,485 | $ | 4,052 | ||||
Finished goods |
1,420 | 845 | ||||||
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Total |
$ | 5,905 | $ | 4,897 | ||||
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Property, plant and equipment consist of the following:
March 31, 2015 |
December 31, 2014 |
Useful life |
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(In thousands) | ||||||||||
Construction in progress |
$ | 1,654 | $ | 24,124 | — | |||||
Buildings |
23,253 | 16,303 | 30 years | |||||||
Machinery and equipment |
102,939 | 78,378 | 3-10 years | |||||||
Computer equipment and software |
6,681 | 5,556 | 3 years | |||||||
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Total |
134,527 | 124,361 | ||||||||
Accumulated depreciation |
(55,007 | ) | (52,869 | ) | ||||||
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Property, plant and equipment, net |
$ | 79,520 | $ | 71,492 | ||||||
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Accrued expenses consist of the following:
March 31, 2015 |
December 31, 2014 |
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(In thousands) | ||||||||
Employee compensation |
$ | 2,408 | $ | 4,851 | ||||
Professional fees |
165 | 76 | ||||||
Deferred rent |
168 | 155 | ||||||
Other accrued expenses |
584 | 506 | ||||||
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Total |
$ | 3,325 | $ | 5,588 | ||||
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Interest expense consists of the following:
Three Months Ended March 31, |
||||||||
2015 | 2014 | |||||||
(In thousands) | ||||||||
Changes in fair value: |
||||||||
Subordinated Notes |
$ | — | $ | 796 | ||||
Senior Convertible Notes |
— | 3,535 | ||||||
Convertible Notes, net of capitalization |
— | 11,740 | ||||||
Debt closing costs |
— | 17 | ||||||
Other interest |
45 | 63 | ||||||
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Total |
$ | 45 | $ | 16,151 | ||||
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