ASPEN AEROGELS INC 10-K

Item 9A. CONTROLS AND PROCEDURES (a) Evaluation of Disclosure Controls and Procedures . We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. As of December 31, 2022, our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In May 2022, we began the implementation of a new enterprise resource planning, or the ERP system. As part of the implementation plan, management has considered the impact of the new ERP system on its operations and internal controls structure. During the quarter ended September 30, 2022, management performed assessments of the conversion, including an analysis to determine if the access and privileges granted to users were appropriately segregated. As a result of these assessments, we identified the following control deficiencies: (1) we did not design and implement effective user access controls to adequately restrict user access and the ability to modify financial data within the ERP system; and (2) we did not design and implement effective change management controls to monitor the appropriateness of changes made to the configurations of automated controls during the implementation period and the initial launch support. These control deficiencies did not result in a known misstatement of the Company’s interim financial statements. However, these control deficiencies could have resulted in material misstatements in our interim financial statements and disclosures, which then may not have been prevented or detected. Therefore, management has concluded that these control deficiencies in aggregate constituted a material weakness in our control over financial reporting. A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. In order to remediate the identified material weakness and enhance our internal controls, during the year ended December 31, 2022, we adjusted access and privileges to provide for appropriate segregation of duties in the performance of internal controls over financial reporting. We also designed and implemented monitoring controls to detect changes within the system, which would impact financial reporting. As a result of these steps, management concluded that the material weakness was remediated as of December 31, 2022. Consequently, management, including our principal executive officer and principal financial officer, concluded that the Consolidated Financial Statements included in this Annual Report on Form 10-K were prepared in accordance with U.S. GAAP and fairly present in all material respects the Company’s financial condition, results of operations and cash flow for the periods presented. Based on such evaluation and the remediation of the material weakness, our principal executive officer and principal financial officer have concluded that, as of December 31, 2022, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. (b) Management’s Report on Internal Control over Financial Reporting . The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external 109 purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that: • pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO, in Internal Control-Integrated Framework (2013). Based on our assessment, management believes that, as of December 31, 2022, the Company’s internal control over financial reporting is effective based on those criteria. Our independent registered public accounting firm has issued an audit report on our assessment of our internal control over financial reporting. This report appears further below in this Item 9A. (c) Changes in Internal Controls . There were no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15(d)-15(f) promulgated under the Exchange Act, identified in connection with the evaluation of such internal control that occurred during the fourth quarter of the last fiscal year that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, other than those discussed in this Item 9A. Item 9B. OTHER INFORMATION Not applicable. Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 110 PART III Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The response to this item is incorporated by reference from the discussion responsive thereto under the captions “Management and Corporate Governance,” “Delinquent Section 16(a) Reports,” and “Code of Business Conduct and Ethics” in the Company’s Proxy Statement for the 2023 Annual Meeting of Stockholders. Item 11. EXECUTIVE COMPENSATION The response to this item is incorporated by reference from the discussion responsive thereto under the caption “Executive Officer and Director Compensation,” “Compensation Discussion and Analysis,” “Pay Versus Performance,” “Management and Corporate Governance – Compensation Committee Interlocks and Insider Participation,” “Compensation Committee Report” and “Risks Related to Compensation Practices and Policies” in the Company’s Proxy Statement for the 2023 Annual Meeting of Stockholders. Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OW NERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The response to this item is incorporated by reference from the discussion responsive thereto under the captions “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” in the Company’s Proxy Statement for the 2023 Annual Meeting of Stockholders. Item 13. CERTAIN RELATIONSHIPS AND RELATE D TRANSACTIONS, AND DIRECTOR INDEPENDENCE The response to this item is incorporated by reference from the discussion responsive thereto under the captions “Certain Relationships and Related Person Transactions” and “Management and Corporate Governance” in the Company’s Proxy Statement for the 2023 Annual Meeting of Stockholders. Item 14. PRINCIPAL ACCOU NTING FEES AND SERVICES The response to this item is incorporated by reference from the discussion responsive thereto under the caption “Independent Registered Public Accounting Firm” in the Company’s Proxy Statement for the 2023 Annual Meeting of Stockholders. 111 PART IV Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES Item 15(a). The following documents are filed as part of this Annual Report on Form 10-K: Item 15(a)(1). The following consolidated financial statements of the Company are included in Part II, Item 8 of this Annual Report on Form 10-K: Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of December 31, 2022 and 2021 Consolidated Statements of Operations for the Years Ended December 31, 2022, 2021, and 2020 Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2022, 2021 and 2020 Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021 and 2020 Notes to Consolidated Financial Statements Item 15(a)(2). The following financial statements schedule is included in Part II, Item 8: Schedule II – Valuation and Qualifying Accounts All other financial statement schedules have not been included because they are not applicable or the information is included in the financial statements or notes thereto. Item 15(a)(3). Exhibits: The following is a list of exhibits filed as part of this Annual Report on Form 10-K. Exhibit Number Exhibit Description Filed with this Report Incorporated by Reference herein from Form or Schedule Filing Date SEC File/Reg. Number 3.1 Restated Certificate of Incorporation of the Registrant, as filed with the Secretary of State of the State of Delaware on June 18, 2014. Form 8-K (Exhibit 3.2) 6/19/14 001-36481 3.2 Restated Bylaws of Aspen Aerogels, Inc. Form 8-K (Exhibit 3.3) 6/19/14 001-36481 4.1 Form of common stock certificate. Amendment No. 1 to Form S-1 (Exhibit 4.1) 5/14/14 333-195523 4.2 Description of Securities. Form 10-K (Exhibit 4.3) 3/6/20 001-36481 4.3 Form of Note (including Indenture incorporated by reference therein). Form 8-K (Exhibit 4.1) 2/17/22 001-36481 4.4 Amendment No. 1 to Convertible Senior PIK Toggle Notes due 2027, dated November 28, 2022. Form 8-K (Exhibit 4.3) 11/29/22 001-36481 10.1 2001 equity incentive plan, as amended. + Form S-1 (Exhibit 10.1.1) 4/28/14 333-195523 10.2 Form of incentive stock option agreement granted under 2001 equity incentive plan, as amended.+ Form S-1 (Exhibit 10.1.2) 4/28/14 333-195523 112 Exhibit Number Exhibit Description Filed with this Report Incorporated by Reference herein from Form or Schedule Filing Date SEC File/Reg. Number 10.3 Form of 2013 incentive stock option agreement for options issued in exchange for the forfeiture of options granted under 2001 equity incentive plan, as amended.+ Form S-1 (Exhibit 10.1.3) 4/28/14 333-195523 10.4 Form of 2013 performance-based incentive stock option agreement granted under 2001 equity incentive plan, as amended.+ Form S-1 (Exhibit 10.1.4) 4/28/14 333-195523 10.5 Form of non-qualified stock option agreement granted under 2001 equity incentive plan, as amended.+ Form S-1 (Exhibit 10.1.5) 4/28/14 333-195523 10.6 Form of 2013 non-qualified stock option agreement for options issued in exchange for the forfeiture of options granted under 2001 equity incentive plan, as amended.+ Form S-1 (Exhibit 10.1.6) 4/28/14 333-195523 10.7 Form of 2013 performance-based non-qualified stock option agreement granted under 2001 equity incentive plan, as amended.+ Form S-1 (Exhibit 10.1.7) 4/28/14 333-195523 10.8 Form of 2013 independent director stock option agreement for options issued in exchange for the forfeiture of options granted under 2001 equity incentive plan, as amended.+ Form S-1 (Exhibit 10.1.8) 4/28/14 333-195523 10.9 Form of 2013 performance-based independent director stock option agreement granted under 2001 equity incentive plan, as amended.+ Form S-1 (Exhibit 10.1.9) 4/28/14 333-195523 10.10 2014 employee, director and consultant equity incentive plan. + Form S-8 (Exhibit 99.10) 8/13/14 333-198124 10.11 Form of stock option agreement granted under 2014 employee, director and consultant equity incentive plan.+ Amendment No. 1 to Form S-1 (Exhibit 10.2.2) 5/14/14 333-195523 10.12 Form of restricted stock unit agreement for executive officers under 2014 employee, director and consultant equity incentive plan. + Form 10-Q (Exhibit 10.3) 11/7/14 001-36481 10.13 Form of restricted stock agreement for directors under 2014 employee, director and consultant equity incentive plan. + Amendment No. 1 to Form S-1 (Exhibit 10.2.3) 5/14/14 333-195523 10.14 Multi-tenant industrial net lease, dated August 20, 2001, by and between the Registrant and Cabot II — MA1M03, LLC (as successor landlord to TMT290 Industrial Park, Inc.), as amended. Form S-1 (Exhibit 10.3) 4/28/14 333-195523 10.14.1 First Amendment to Lease, dated December 22, 2021, by and between the Registrant and G&I IX Forbes Whitney, LLC. Form 10-K (Exhibit 10.14.1) 3/1/22 001-36481 10.15 Form of Performance-Based Restricted Stock Agreement for certain employees + Form 10-Q (Exhibit 10.2) 8/4/22 001-36481 10.16 Loan Agreement, dated November 28, 2022, by and between the Registrant, Aspen Aerogels Georgia LLC, Aspen Aerogels Rhode Island, LLC and General Motors Holdings LLC. Form 8-K (Exhibit 10.1) 11/29/22 001-36481 10.17 Executive Agreement, dated as of January 4, 2022, by and between the Registrant and Donald R. Young. + Form 10-K (Exhibit 10.17.4) 3/1/22 001-36481 113 Exhibit Number Exhibit Description Filed with this Report Incorporated by Reference herein from Form or Schedule Filing Date SEC File/Reg. Number 10.18 Form of executive agreement, dated as of January 4, 2022, by and between the Registrant and each of Messrs. Fairbanks and Whitaker. + Form 10-K (Exhibit 10.18.1) 3/1/22 001-36481 10.18.1 Separation Agreement, dated March 29, 2022, by and between the Registrant and John F. Fairbanks.+ Form 10-Q (Exhibit 10.8) 5/10/22 001-36481 10.18.2 Consulting Agreement, dated March 29, 2022, by and between the Registrant and John F. Fairbanks.+ Form 10-Q (Exhibit 10.9) 5/10/22 001-36481 10.18(3) Executive Employment Agreement, dated January 1, 2023, by and between the Registrant and Ricardo C. Rodriguez.+ X 10.18(4) Executive Employment Agreement, dated January 1, 2023, by and between the Registrant and Kelley Conte.+ X 10.18(5) Executive Employment Agreement, dated January 1, 2023, by and between the Registrant and Gregg Landes.+ X 10.18(6) Executive Employment Agreement, dated March 25, 2022, by and between the Registrant and Virginia H. Johnson.+ X 10.18(7) Executive Employment Agreement, dated January 1, 2023, by and between the Registrant and Keith Schilling.+ X 10.18(8) Executive Employment Agreement, dated January 1, 2023, by and between the Registrant and Corby Whitaker.+ X 10.19 Bonus plan. + Amendment No. 2 to Form S-1 (Exhibit 10.15) 5/22/14 333-195523 10.20 Form of participation letter of executive officers under bonus plan. + Form 10-K (Exhibit 10.23) 3/2/17 001-36481 10.21 Non-Employee Director Compensation Policy. + Form 10-Q (Exhibit 10.13) 5/10/22 001-36481 10.22 Compensation Recoupment Policy. Form 10-K (Exhibit 10.25) 3/8/19 001-36481 10.23 Cross license agreement dated as of April 1, 2006 by and between Cabot Corporation and the Registrant, as amended.* Form S-1 (Exhibit 10.17) 4/28/14 333-195523 10.24 Form of indemnification agreement with directors and certain officers. + Amendment No. 1 to Form S-1 (Exhibit 10.18) 5/14/14 333-195523 10.25 Inducement Agreement, dated as of February 17, 2022, by and among Aspen Aerogels Georgia, LLC, the Development Authority of Bulloch County, the City of Statesboro, and Bulloch County, Georgia. Form 10-Q (Exhibit 10.1) 5/10/22 001-36481 10.26 PILOT Agreement, dated as of February 17, 2022, by and among Aspen Aerogels Georgia, LLC and the Development Authority of Bulloch County. Form 10-Q (Exhibit 10.3) 5/10/22 001-36481 10.27 Performance and Accountability Agreement, dated as of February 17, 2022, by and among Aspen Aerogels Georgia, LLC, the Development Authority of Bulloch County, and the Georgia Department of Community Affairs. Form 10-Q (Exhibit 10.4) 5/10/22 001-36481 114 Exhibit Number Exhibit Description Filed with this Report Incorporated by Reference herein from Form or Schedule Filing Date SEC File/Reg. Number 10.28 Securities Purchase Agreement, dated February 15, 2022, by and between the Registrant and Wood River Capital, LLC. Form 8-K (Exhibit 10.2) 2/17/22 001-36481 10.29 Memorandum of Understanding, dated as of February 17, 2022, by and between Aspen Aerogels Georgia, LLC, the Development Authority of Bulloch County and the Georgia Department of Economic Development. Form 10-Q (Exhibit 10.2) 5/10/22 001-36481 10.30 Sales Agreement, dated March 16, 2022, by and among the Registrant, Cowen and Company, LLC and Piper Sandler & Co. (incorporated by reference to Exhibit 10.1 of the Registrant’s Form 8-K, filed on March 16, 2022). Form 10-Q (Exhibit 10.5) 5/10/22 001-36481 10.31 Supply Agreement, dated February 3, 2021, by and between the registrant and Silbond Corporation.* Form 10-Q (Exhibit 10.1) 5/4/21 001-36481 10.32 Securities Purchase Agreement, dated June 29, 2021, by and between the Registrant and Spring Creek Capital, LLC. Form 8-K (Exhibit 10.1) 6/30/21 001-36481 10.33 Performance-Based Restricted Stock Agreement, dated as of June 29, 2021, by and between the Registrant and Donald R. Young. + Form 10-Q (Exhibit 10.3) 8/4/21 001-36481 10.34 Note Purchase Agreement, dated February 15, 2022, by and between the Registrant and Wood River Capital, LLC. Form 8-K (Exhibit 10.1) 2/17/22 001-36481 10.34.1 Amendment to Note Purchase Agreement, dated November 28, 2022, by and between the Registrant and Wood River Capital, LLC. Form 8-K (Exhibit 10.12) 11/29/22 001-36481 14.1 Code of business conduct and ethics. Form 10-K (Exhibit 14.1) 3/6/20 001-36481 21.1 Subsidiaries of the Registrant. X 23.1 Consent of KPMG LLP. X 31.1 Certification of principal executive officer under Section 302(a) of the Sarbanes-Oxley Act of 2002. X 31.2 Certification of principal financial officer under Section 302(a) of the Sarbanes-Oxley Act of 2002. X 32 Certifications of the principal executive officer and the principal financial officer under Section 906 of the Sarbanes-Oxley Act of 2002. X 101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. X 101.SCH Inline XBRL Taxonomy Extension Schema Document. X 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. X 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. X 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. X 115 Exhibit Number Exhibit Description Filed with this Report Incorporated by Reference herein from Form or Schedule Filing Date SEC File/Reg. Number 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. X 104 Cover Page Interactive Data File (embedded within the Inline XBRL document). X + Management contract or compensatory plan or arrangement. * Confidential treatment has been granted with respect to certain portions of this Exhibit, which portions have been omitted and filed separately with the Securities and Exchange Commission as part of an application for confidential treatment pursuant to the Securities Act of 1933, as amended. Item 16. FORM 10-K SUMMARY None. 116 SIGNAT URES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ASPEN AEROGELS, INC. Date: March 16, 2023 By: /s/ Donald R. Young Donald R. Young President and Chief Executive Officer (principal executive officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated below and on the dates indicated. Signature Title Date /s/ Donald R. Young Donald R. Young President, Chief Executive Officer and Director (principal executive officer) March 16, 2023 /s/ Ricardo C. Rodriguez Ricardo C. Rodriguez Chief Financial Officer and Treasurer (principal financial officer and principal accounting officer) March 16, 2023 /s/ William P. Noglows William P. Noglows Chairperson of the Board March 16, 2023 /s/ Rebecca B. Blalock Rebecca B. Blalock Director March 16, 2023 /s/ James E. Sweetnam James E. Sweetnam Director March 16, 2023 /s/ Kathleen M. Kool Kathleen M. Kool Director March 16, 2023 /s/ Steven R. Mitchell Steven R. Mitchell Director March 16, 2023 /s/ Mark L. Noetzel Mark L. Noetzel Director March 16, 2023 /s/ Richard F. Reilly Richard F. Reilly Director March 16, 2023 117