ASPEN AEROGELS INC (ASPN)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following information should be read in conjunction with the unaudited financial information and the notes thereto included in this Quarterly Report on Form 10-Q and the audited financial information and the notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2025, filed with the U.S. Securities and Exchange Commission (SEC) on March 13, 2026, as amended on March 23, 2026, which we refer to as the Annual Report.

Certain matters discussed in this Quarterly Report on Form 10-Q may be deemed to be forward-looking statements that involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. In this Quarterly Report on Form 10-Q, words such as “may,” “will,” “anticipate,” “estimate,” “expects,” “projects,” “intends,” “plans,” “believes” and similar expressions (as well as other words or expressions referencing future events, conditions or circumstances) are intended to identify forward-looking statements.

Our actual results and the timing of certain events may differ materially from the results discussed, projected, anticipated, or indicated in any forward-looking statements. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this Quarterly Report on Form 10-Q, they may not be predictive of results or developments in future periods.

The following information and any forward-looking statements should be considered in light of factors discussed elsewhere in this Quarterly Report on Form 10-Q, including Part I Item 1 “Financial Statements,” which includes our financial statements and related notes, and under the sections titled “Risk Factors” in Item 1A of the Annual Report and this Quarterly Report on Form 10-Q.

We caution readers not to place undue reliance on any forward-looking statements made by us, which speak only as of the date they are made. We disclaim any obligation, except as specifically required by law and the rules of the SEC, to publicly update or revise any such statements to reflect any change in our expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.

Investors and others should note that we routinely use the Investors section of our website to announce material information to investors and the marketplace. While not all of the information that we post on the Investors section of our website is of a material nature, some information could be deemed to be material. Accordingly, we encourage investors, the media, and others interested in us to review the information that we share on the Investors section of our website, https://www.aerogel.com. The information contained on, or that can be accessed through, our website is not a part of, or incorporated by reference in, this Quarterly Report on Form 10-Q or our other filings with the SEC. We have included our website address in this Quarterly Report on Form 10-Q solely as an inactive textual reference.

Products

Our core businesses are organized into two reportable segments: Thermal Barrier and Energy Industrial. The following describes our key product offerings and new product innovations by reportable segment.

Thermal Barrier

We have developed a number of promising aerogel products and technologies for the electric vehicle (EV) market, including our proprietary line of PyroThin aerogel thermal barriers for use in battery packs in EVs. Our PyroThin product is an ultra-thin, lightweight and flexible thermal barrier designed with other functional layers to impede the propagation of thermal runaway across multiple lithium-ion battery system architectures. Our thermal barrier technology is designed to offer a unique combination of thermal management, mechanical performance and fire protection properties. These properties enable EV manufacturers to achieve critical battery performance and safety goals by impeding the propagation of thermal runaway in lithium-ion battery systems at the battery cell, module, and pack levels across multiple lithium-ion battery system architectures. Our ultra-thin, lightweight, and flexible thermal barriers are designed to allow battery manufacturers to achieve critical safety goals without sacrificing energy density.

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We have entered into multi-year production contracts with a number of automotive EV original equipment manufacturer (OEM) customers to supply fabricated, multi-part thermal barriers for use in the battery systems of their EV models. These customers include General Motors LLC (GM), Toyota, Scania, Automotive Cells Company, which is a battery cell joint venture between Stellantis N.V., Saft-TotalEnergies and Mercedes-Benz (collectively, ACC), Volvo, and Volvo Truck. We are currently supplying thermal barrier production parts to GM, Toyota, and ACC, and thermal barrier prototype parts to a number of global manufacturers of EVs, grid storage and home battery systems. During 2025, 2024 and 2023, we sold $168.9 million, $306.8 million and $110.1 million, respectively, of our PyroThin thermal barriers, primarily to GM.

Our patented aerogel products and manufacturing technologies are significant assets. Silica aerogels are complex structures in which 97% of the volume consists of air trapped between intertwined clusters of amorphous silica solids. We believe these extremely low-density solids provide superior thermal and acoustic insulating properties. Although silica aerogels are usually fragile materials, we have developed innovative and proprietary manufacturing processes that enable us to produce industrially robust aerogel insulation cost-effectively and at commercial scale.

Our aerogel thermal barrier products are designed to enable our customers to enhance the safety and performance of their lithium-ion battery systems. These barriers are designed to impede the propagation of thermal runaway in lithium-ion battery systems at the battery cell, module, and pack levels across multiple lithium-ion battery system architectures. Our ultra-thin, lightweight and flexible thermal barriers are designed to allow battery manufacturers to achieve critical safety goals without sacrificing energy density. We believe our array of aerogel insulation product attributes provides strong competitive advantages over traditional insulation.

Energy Industrial

We design, develop and manufacture innovative, high-performance aerogel insulation used primarily in the energy industrial market. We believe our aerogel blankets deliver the best thermal performance of any widely used insulation product available on the market today and provide a combination of performance attributes unmatched by traditional insulation materials. Our insulation products help end-users to improve resource efficiency, reduce energy consumption, and reduce the carbon footprint of their operations. These products enable compact system design, reduce installation time and costs, promote freight and logistics cost savings, reduce system weight, minimize required storage space and enhance job site safety. Our insulation products reduce the incidence of corrosion under insulation, which is a significant maintenance cost and safety issue in energy industrial facilities. Many of our insulation products also offer strong fire protection, which is a critical performance requirement in the markets we service. We believe our array of product attributes provides strong competitive advantages over traditional insulation.

Our end-user customers select our products where thermal performance is critical and to save money, improve resource efficiency, enhance sustainability, preserve operating assets and protect workers. Our insulation is used by oil producers and the owners and operators of refineries, petrochemical plants, liquefied natural gas (LNG) facilities, power generating assets, and other energy industrial sites. Our Pyrogel® and Cryogel® aerogel insulation product lines have undergone rigorous technical validation by industry leading end-users and achieved significant market adoption.

We also derive revenue from a number of other end markets. Customers in these markets have used our products for applications such as military aircrafts, trains, and buses. We believe we will have additional opportunities to address high-value applications in the global insulation market, as well as in adjacent market opportunities such as energy storage applications, including battery energy storage systems, electrification applications, and other potential adjacent applications subject to their commercial potential, the differentiation of our products, and the ability to leverage our existing manufacturing platform.

Our technologically advanced insulation products are targeted at the multi-billion dollar global market for energy industrial insulation materials. Our products replace traditional insulation in existing facilities during regular maintenance, upgrades, and capacity expansions. In addition, our aerogel products are also specified for use in new-build energy industrial facilities.

We have grown our business by forming technical and commercial relationships with industry leaders that have allowed us to optimize our products to meet the particular demands of target market sectors. We have benefited from our technical and commercial relationships with ExxonMobil in the oil refinery and petrochemical sectors, and with TechnipFMC in the offshore oil sector. We will continue our strategy of working with innovative companies to target and penetrate additional opportunities in the energy industrial and sustainable insulation materials markets. We believe that our long-term record of success positions us for future growth and the opportunity to gain market share in the energy industrial and sustainable insulation markets.

We market and sell our products primarily through a sales force based in North America, Europe and Asia. The efforts of our sales force are supported by a small number of sales consultants with extensive knowledge of a particular market or region. Our sales force is responsible for establishing and maintaining customer and partner relationships, delivering highly technical information and ensuring high-quality customer service.

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Our salespeople work directly with end-user customers and engineering firms to promote the qualification, specification and acceptance of our aerogel and thermal barrier products. We also rely on an existing and well-established channel of qualified insulation distributors and contractors in more than 50 countries around the world to help provide rapid delivery of our aerogel products and strong end-user support.

Manufacturing Operations

We manufacture our products using our proprietary technology at our facility in East Providence, Rhode Island, which we have operated since 2008, as well as by utilizing our external manufacturing facility in China. We manage the capacity of our East Providence facility on an ongoing basis in order to meet expected demand for our aerogel products. We also utilize a flexible supply strategy, including, but not limited to, use of our external manufacturing facility in China, which currently support our Energy Industrial segment. We are workin

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Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes thereto included in this Annual Report on Form 10-K. In addition to historical information, some of the information contained in the following discussion and analysis or set forth elsewhere in this report, including information with respect to our plans and strategy for our business, includes forward-looking information that involves risks, uncertainties and assumptions. You should read the Risk Factors set forth in Item 1A of this Annual Report on Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Our actual results and the timing of events could differ materially from those anticipated by these forward looking statements.

Investors and others should note that we routinely use the Investors section of our website to announce material information to investors and the marketplace. While not all of the information that we post on the Investors section of our website is of a material nature, some information could be deemed to be material. Accordingly, we encourage investors, the media, and others interested in us to review the information that we share on the Investors section of our website, https://www.aerogel.com/. The information contained on, or that can be accessed through, our website is not a part of, or incorporated by reference in, this Annual Report on Form 10-K or our other filings with the SEC. We have included our website address in this Annual Report on Form 10-K solely as an inactive textual reference.

Products

Our core businesses are organized into two reportable segments: Thermal Barrier and Energy Industrial. The following describes our key product offerings and new product innovations by reportable segment.

Thermal Barrier

We have developed a number of promising aerogel products and technologies for the electric vehicle (EV) market, including our proprietary line of PyroThin aerogel thermal barriers for use in battery packs in EVs. Our PyroThin product is an ultra-thin, lightweight and flexible thermal barrier designed with other functional layers to impede the propagation of thermal runaway across multiple lithium-ion battery system architectures. Our thermal barrier technology is designed to offer a unique combination of thermal management, mechanical performance and fire protection properties. These properties enable EV manufacturers to achieve critical battery performance and safety goals by impeding the propagation of thermal runaway in lithium-ion battery systems at the battery cell, module, and pack levels across multiple lithium-ion battery system architectures. Our ultra-thin, lightweight and flexible thermal barriers are designed to allow battery manufacturers to achieve critical safety goals without sacrificing energy density.

We have entered into multi-year production contracts with a number of automotive EV original equipment manufacturer (OEM) customers to supply fabricated, multi-part thermal barriers for use in the battery systems of their EV models. These customers include General Motors LLC (GM), Scania, Automotive Cells Company, which is a battery cell joint venture between Stellantis N.V, Saft-TotalEnergies and Mercedes-Benz (ACC), Audi, a luxury brand of the Volkswagen Group, Volvo Truck, and a large EU battery manufacturer to supply a next generation vehicle platform of a major EU luxury sports car brand. We are currently supplying thermal barrier production parts to GM, Toyota, and ACC, and thermal barrier prototype parts to a number of global manufacturers of EVs, grid storage, and home battery systems. During 2025, 2024 and 2023, we sold $168.9 million, $306.8 million and $110.1 million, respectively, of our PyroThin thermal barriers, primarily to GM.

Energy Industrial

We design, develop and manufacture innovative, high-performance aerogel insulation used primarily in the energy industrial market. We believe our aerogel blankets deliver the best thermal performance of any widely used insulation product available on the market today and provide a combination of performance attributes unmatched by traditional insulation materials. Our insulation products help end-users to improve resource efficiency, reduce energy consumption, and reduce the carbon footprint of their operations. These products enable compact system design, reduce installation time and costs, promote freight and logistics cost savings, reduce system weight, minimize required storage space, and enhance job site safety. Our insulation products reduce the incidence of corrosion under insulation, which is a significant maintenance cost and safety issue in energy industrial facilities. Our

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end-user customers select our products where thermal performance is critical and to save money, improve resource efficiency, enhance sustainability, preserve operating assets, and protect workers. Our insulation is used by oil producers and the owners and operators of refineries, petrochemical plants, liquefied natural gas (LNG) facilities, power generating assets, and other energy industrial sites. Our Pyrogel® and Cryogel® product lines have undergone rigorous technical validation by industry leading end-users and achieved significant market adoption.

We also derive revenue from a number of other end markets. Customers in these markets use our products for applications such as military aircrafts, trains, and buses. We believe we will have additional opportunities to address high-value applications in the global insulation market, as well as in adjacent market opportunities such as energy storage applications, including battery energy storage systems, electrification applications and other potential adjacent applications subject to their commercial potential, the differentiation of our products, and the ability to leverage our existing manufacturing platform.

We market and sell our products primarily through a sales force based in North America, Europe, and Asia. The efforts of our sales force are supported by a small number of sales consultants with extensive knowledge of a particular market or region. Our sales force is responsible for establishing and maintaining customer and partner relationships, delivering highly technical information and ensuring high-quality customer service.

Our salespeople work directly with end-user customers and engineering firms to promote the qualification, specification and acceptance of our aerogel and thermal barrier products. We also rely on an existing and well-established channel of qualified insulation distributors and contractors in more than 50 countries around the world to ensure rapid delivery of our aerogel products and strong end-user support.

Manufacturing Operations

We manufacture our products using our proprietary technology at our facility in East Providence, Rhode Island, which we have operated since 2008. During 2024, we converted our East Providence facility to support the growth of the thermal barrier program. We manage the capacity of our East Providence facility on an ongoing basis in order to meet expected demand for our aerogel products. We also utilize a flexible supply strategy, including, but not limited to, use of our external manufacturing capabilities in China, which currently support our Energy Industrial segment. Pursuant to our supply contract with this contract manufacturer, they are obligated to deliver products to us as we issue purchase orders on an as-needed basis through the term of the contract. The contract automatically renews year-to-year unless either party notifies the other of its intention not to renew the contract. While we have agreed to purchase our requirement for certain Energy Industrial products from the contract manufacturer, we have no obligation to purchase any minimum quantity under the contract and we may terminate the contract at any time and for any or no reason. Additionally, we entered into a contract with Prodensa Servicios de Consultora (Prodensa) to establish OPE Manufacturer Mexico S de RL de CV, a maquiladora located in Mexico (OPE), which assembles thermal barrier PyroThin products and operates an automated fabrication facility for PyroThin. We subsequently purchased OPE for a nominal value in accordance with the terms of the agreement.

We expect to meet demand for our aerogel products by utilizing both our East Providence facility and our flexible supply strategy, including, but not limited to, using our external manufacturing capabilities.

MidCap Loan Facility

On August 19, 2024, we and Aspen Aerogels Rhode Island, LLC, a Rhode Island limited liability company (Aspen RI and, together with the Company, each, a Borrower and collectively, the Borrowers) entered into a Credit, Security and Guaranty Agreement (the Credit Agreement and the facilities provided thereunder, collectively, the MidCap Loan Facility), by and among the Borrowers, MidCap Funding IV Trust, as agent (the Agent), MidCap Financial Trust, as term loan servicer (the Term Loan Servicer), the financial institutions or other entities from time to time party thereto as lenders (the Lenders), and the other parties party thereto as additional guarantors and/or borrowers from time to time. The proceeds of the MidCap Loan Facility were used to repurchase our outstanding convertible note, the payment of related fees and expenses and for working capital. Loans borrowed under the MidCap Loan Facility mature on August 19, 2029.

On May 6, 2025, the Borrowers and Aspen Aerogels Georgia, LLC, a Georgia limited liability company (Aspen Georgia), entered into that certain Amendment No. 1 and Joinder to Credit, Security and Guaranty Agreement (Amendment No. 1), by and among the Borrowers, Aspen Georgia, the Agent and the Lenders party thereto, amending the MidCap Loan Facility and on December 16, 2025, the Borrowers, Aspen Georgia, and Aspen Aerogels Mexico Holdings, LLC, a Delaware limited liability company (Aspen Mexico), entered into that certain Amendment No. 2 and Joinder to Credit, Security and Guaranty Agreement (Amendment No. 2), by and among the Borrowers, Aspen Georgia, Aspen Mexico, the Agent and the Lenders party thereto, further amending the MidCap Loan Facility (the MidCap Loan Facility, as amended by Amendment No. 1 and Amendment No. 2, the Amended MidCap Loan Facility).

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The Amended MidCap Loan Facility is guaranteed by Aspen Mexico and Aspen Georgia (together with the Borrowers and any future subsidiaries that are required to become guarantors or borrowers pursuant to the terms of the Credit Agreement, collectively, the Loan Parties) and is secured by a lien on substantially all existing and after-acquired assets of the Loan Parties, including the equity interest in Aspen RI, Aspen Mexico and Aspen Georgia owned by us, in each case, subject to customary exceptions.

Pursuant to Amendment No. 1, the financial covenants under the MidCap Loan Facility were amended such that (a) the minimum Liquidity (as defined in the Amended MidCap Loan Facility) which must be maintained at all times has changed from $75 million to an amount equal to the greater of (i) $50 million and (ii) 85% of the then aggregate outstanding principal amount of the Term Loan Facility and (b) the minimum EBITDA level to be tested quarterly has changed to reflect a new range from $15 million to $50 million, with the next test set at $15 million with respect to the fiscal quarter ended June 30, 2025 and a $50 million level applicable commencing with the fiscal quarter ended December 31, 2027 and thereafter. The Liquidity amount trigger of a cash dominion event was also reduced from $100 million to an amount equal to the greater of (i) $50 million and (ii) 85% of the then aggregate outstanding principal amount of the Term Loan Facility.

Pursuant to Amendment No. 2, the financial covenants under the MidCap Loan Facility have been amended such that (a) the applicable minimum liquidity threshold (both for (i) the minimum liquidity financial covenant, which must be maintained by the Company at all times and (ii) the “Cash Dominion Event” definition for purposes of triggering cash dominion) has changed from (i) an amount equal to the greater of (x) $50 million and (y) 85% of the then aggregate outstanding principal amount of the Term Loan (as defined in the Amended MidCap Loan Facility) to (ii) an amount equal to the greater of (x) $50 million and (y) 100% of the then aggregate outstanding principal amount of the Term Loan (as defined in the Amended MidCap Loan Facility) and (b) the minimum EBITDA (as defined in the Amended MidCap Loan Facility) financial maintenance covenant has been removed entirely.

The Amended MidCap Loan Facility includes representations and warranties, affirmative covenants (including reporting obligations), negative covenants and events of default that are usual and customary for facilities of this type, in each case, subject to certain permitted exceptions as set forth therein. In addition, the mandatory prepayment provisions were revised to make clear that any mandatory prepayment of the loans under the Amended MidCap Loan Facility made with proceeds of an asset sale will be used to reduce the Company’s required amortization payments in direct order of maturity, and the basket for making permitted acquisitions under the Amended MidCap Loan Facility was reduced.

Financial Summary

In December 2023, we sold 6,060,607 shares of our common stock at an offering price of $12.38 per share in a registered direct offering for net proceeds of $74.4 million, after deducting offering expenses of approximately $0.6 million.

In October 2024, we sold 4,887,500 shares of our common stock at an offering price of $20.00 per share in a registered direct offering for net proceeds of $93.2 million, after deducting offering expenses of approximately $0.7 million.

Key Metrics and Non-GAAP Financial Measures

We regularly review a number of metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions.

Adjusted EBITDA

We use Adjusted EBITDA, a non-GAAP financial measure, as a means to assess our operating performance. We define Adjusted EBITDA as net income (loss) before interest expense, taxes, depreciation, amortization, stock-based compensation expense and other items, from time to time, which we do not believe are indicative of our core operating performance. Adjusted EBITDA is a supplemental measure of our performance that is not presented in accordance with U.S. GAAP. Adjusted EBITDA should not be considered as an alternative to net income (loss) or any other measure of financial performance calculated and presented in accordance with U.S. GAAP. In addition, our definition and presentation of Adjusted EBITDA may not be comparable to similarly titled measures presented by other companies.

We use Adjusted EBITDA:

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as a measure of operating performance because it does not include the impact of items that we do not consider indicative of our core operating performance;

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for planning purposes, including the preparation of our annual operating budget;

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to allocate resources to enhance the financial performance of our business; and

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as a performance measure used under our bonus plan.

We also believe that the presentation of Adjusted EBITDA provides useful information to investors with respect to our results of operations and in assessing the performance and value of our business. Various measures of EBITDA are widely used by investors to measure a company’s operating performance without regard to items that can vary substantially from company to company depending upon financing and accounting methods, book values of assets, capital structures and the methods by which assets were acquired.

Although measures similar to Adjusted EBITDA are frequently used by investors and securities analysts in their evaluation of companies, we understand that Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for net income (loss), income (loss) from operations, net cash provided by (used in) operating activities or an analysis of our results of operations as reported under U.S. GAAP. Some of these limitations are:

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Adjusted EBITDA does not reflect our historical cash expenditures or future requirements for capital expenditures or other contractual commitments;

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Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

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Adjusted EBITDA does not reflect stock-based compensation expense;

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Adjusted EBITDA does not reflect our income tax expense or cash requirements to pay our income taxes;

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Adjusted EBITDA does not reflect our interest expense, or the cash requirements necessary to service interest or principal payments on our debt;

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although depreciation, amortization and impairment charges are non-cash charges, the assets being depreciated, amortized or impaired will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for these replacements; and

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other companies in our industry may calculate EBITDA or Adjusted EBITDA differently than we do, limiting their usefulness as a comparative measure.

Because of these limitations, our Adjusted EBITDA should not be considered as a measure of discretionary cash available to us to reinvest in the growth of our business or as a measure of cash available for us to meet our obligations.

To properly and prudently evaluate our business, we encourage you to review the U.S. GAAP financial statements included elsewhere in this Annual Report on Form 10-K, and not to rely on any single financial measure to evaluate our business.

The following table presents a reconciliation of net income (loss), the most directly comparable U.S. GAAP measure, to Adjusted EBITDA for the years presented:

(1)
Represents non-cash stock-based compensation related to vesting and modifications of stock option grants, restricted stock units (RSUs) and restricted common stock, and cash settled RSUs issued in March 2025.

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The following table presents a reconciliation of net income (loss), the most directly comparable U.S. GAAP measure, to Adjusted EBITDA for the quarters presented:

(1)
Represents non-cash stock-based compensation related to vesting and modifications of stock option grants, RSUs and restricted common stock, and cash settled RSUs issued in March 2025.

Our financial performance, including such measures as net income (loss), earnings per share and Adjusted EBITDA, are affected by a number of factors including volume and mix of aerogel products sold, average selling prices, our material costs and manufacturing expenses, the costs associated with capacity expansions and start-up of additional production capacity, and the amount and timing of operating expenses. Accordingly, we expect that our net income (loss), earnings per share and Adjusted EBITDA will vary from period to period.

During 2025, we experienced a significant decline in volume for our thermal barrier products, primarily driven by lower North American EV production levels. As a result, total revenue decreased by 40% compared to the prior year. Our expectation for 2026 thermal barrier revenue is based, in part, on our OEM customers’ production forecasts. The automotive industry in which our OEM customers operate is cyclical and is sensitive to changes in consumer demand, regulatory environments, and broader economic conditions. EV adoption rates in certain markets have been lower than previously anticipated, influenced in part by changes in regulatory frameworks and incentive programs as well as evolving consumer demand. OEMs have adjusted production plans and investment timelines accordingly. These actions have resulted in revised capacity plans and re-timed EV-related investments, particularly in North America. In addition, changes in trade policy and other macroeconomic factors have impacted both our customers and our operating environment, and we expect these conditions to continue to influence demand. OEM customers continue to pursue cost reduction and product redesign initiatives, which may result in engineering changes to the components we supply. Our supply agreements generally include pricing step-down provisions over the production life of a program, consistent with industry practice. We expect thermal barrier revenues to decline in 2026, primarily due to lower anticipated production volumes. In February 2026, there was a fire at our manufacturing facility in East Providence, Rhode Island, which damaged one of our emissions control units and rendered it inoperable. If our remaining emissions control unit were to fail or otherwise cease to operate before the damaged unit is replaced, or if demand for our products increases materially before our damaged emissions control is replaced, we may not able to meet customer demand for our products, which could have a material adverse impact our revenue and earnings.

We expect energy industrial revenue to increase in 2026, driven by anticipated volume growth in our core petrochemical and refinery markets, project-based demand, and continued penetration into adjacent applications.

In response to these developments, we plan to continue cost reduction measures, including reduced headcount and operational efficiency initiatives. As a result, we expect Adjusted EBITDA to decline in 2026 primarily due to lower thermal barrier revenue. However, we expect net loss to improve relative to 2025, as the impairment recorded for the previously planned second plant in Statesboro, Georgia is not expected to recur. We also expect capital expenditures to decrease in 2026.

Revenue

We recognize revenue from the sale of our energy industrial aerogel products and thermal barriers. Revenue is recognized upon the satisfaction of contractual performance obligations.

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We record deferred revenue for product sales when (i) we have 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.

The following table sets forth the total revenue for the periods presented:

Energy industrial revenue accounted for 38%, 32%, and 54% of total revenue for the years ended December 31, 2025, 2024 and 2023, respectively. We experienced a 40% decrease in total revenue during 2025 driven by the decreases in our EV business and energy industrial business, particularly in Latin and North America.

A substantial majority of our revenue is generated from a limited number of direct customers, including distributors, contractors, fabricators, OEMs, partners and end-user customers. Our ten largest customers accounted for approximately 84% of our total revenue during the year ended December 31, 2025, and we expect that most of our revenue will continue to come from a relatively small number of customers for the foreseeable future.

In 2025, sales to GM and Distribution International, Inc. (Distribution) represented 59% and 9% of our total revenue, respectively. In 2024, sales to GM and Distribution represented 64% and 6% of our total revenue, respectively. In 2023, sales to GM and Distribution represented 41% and 14% of our total revenue, respectively. For each of the noted periods, there were no other customers that represented 10% or more of our total revenues.

We conduct business across the globe and a substantial portion of our revenue is generated outside of the United States. Total revenue from outside of the United States, based on shipment destination, amounted to $99.0 million, or 37% of our total revenue, $194.2 million, or 43% of our total revenue, and $87.7 million, or 37% of our total revenue, in the years ended December 31, 2025, 2024 and 2023, respectively.

Cost of Revenue

Cost of product revenue consists primarily of materials and manufacturing expenses. Cost of product revenue is recorded when the related product revenue is recognized.

Material is a significant component of cost of product revenue and includes fibrous batting, silica materials, CO2 and other additives. Material costs as a percentage of product revenue were 42%, 38% and 36% for the years ended December 31, 2025, 2024 and 2023, respectively. Material costs as a percentage of product revenue vary from product to product due to differences in average selling prices, material requirements, product thicknesses, and manufacturing yields. In addition, we provide warranties for our products and record the estimated cost within cost of revenue in the period that the related revenue is recorded or when we become aware that a potential warranty claim is probable and can be reasonably estimated. As a result of these factors, material costs as a percentage of product revenue will vary from period to period due to changes in the mix of aerogel products sold, the costs of our raw materials or the estimated cost of warranties. In addition, global supply chain disturbances, increased reliance on foreign materials procurement, industrial gas supply constraints, increases in the cost of our raw materials, engineering changes, higher prototype sales and other factors may significantly impact our material costs and have a material impact on our operations. We expect that material costs will decrease in absolute dollars during 2026 due to projected decline in product shipments and contracts but remain stable as a percentage of revenue due to improved manufacturing, and fabrication yields and a favorable mix of products sold.

Manufacturing expense is also a significant component of cost of revenue. Manufacturing expense includes labor, utilities, maintenance expense, and depreciation on manufacturing assets. Manufacturing expense also includes stock-based compensation of manufacturing employees and shipping costs. Manufacturing expense as a percentage of product revenue was 33%, 22% and 46% for the years ended December 31, 2025, 2024 and 2023, respectively. We expect that manufacturing expense will decline in absolute dollars, due to ongoing cost reduction efforts, and increase as a percentage of revenue during 2026 due to lower expected revenues from the thermal barrier business.

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We are also continuing to monitor the impact on our material costs, manufacturing expense, and cost of product revenue from engaging one or more external manufacturing facilities in China to supply our aerogel products.

Gross Profit

Our gross profit as a percentage of revenue is affected by a number of factors, including the volume of products produced and sold, the mix of products sold, average selling prices, our material and manufacturing costs, realized capacity utilization and the costs associated with expansions and start-up of production capacity. Accordingly, we expect our gross profit to vary significantly in absolute dollars and as a percentage of revenue from period to period. Gross profit as a percentage of total revenue was 17%, 40%, and 24% for the years ended December 31, 2025, 2024 and 2023, respectively.

During 2026, we expect gross profit to decline in absolute dollars and as a percentage of revenue due to expected decreases in total revenue and production volumes, offset partially by manufacturing productivity.

Operating Expenses

Operating expenses consist of research and development, sales and marketing, and general and administrative expenses. Operating expenses include personnel costs, legal fees, professional fees, service fees, insurance premiums, travel expense, facilities related costs and other costs, expenses and fees. The largest component of our operating expenses is personnel costs, consisting of salaries, benefits, incentive compensation and stock-based compensation. In any particular period, the timing and extent of personnel additions or reductions, legal activities, including patent enforcement actions, marketing programs, research efforts and a range of similar activities or actions could materially affect our operating expenses, both in absolute dollars and as a percentage of revenue.

Research and Development Expenses

Research and development expenses consist primarily of expenses for personnel engaged in the development of next generation aerogel compositions, form factors and manufacturing technologies. These expenses also include testing services, prototype expenses, consulting services, trial formulations for new products, equipment depreciation, facilities costs and related overhead. We expense research and development costs as incurred. We expect to continue to devote substantial resources to the development of new aerogel technologies.

Sales and Marketing Expenses

Sales and marketing expenses consist primarily of personnel costs, incentive compensation, marketing programs, travel and related costs, consulting expenses and facilities related costs.

General and Administrative Expenses

General and administrative expenses consist primarily of personnel costs, legal expenses, consulting and professional services, audit fees, compliance with securities, corporate governance and related laws and regulations, investor relations and insurance premiums, including director and officer insurance. We expect our general and administrative expenses to decrease as we continue our ongoing cost reduction measures, including reduced headcount. We also expect that the patent enforcement actions, described in more detail under “Legal Proceedings” in Part I, Item 3 of this Annual Report on Form 10-K, if protracted, could result in significant legal expenses over time.

Restructuring and Demobilization Costs

Restructuring and demobilization costs consists of severance and other personnel costs, and costs associated with the demobilization of our previously planned Statesboro Plant.

Loss on Disposal of Property, Plant and Equipment

During the fiscal year ended December 31, 2025, loss on disposal of property, plant and equipment consists of charges to remeasure at fair value less costs to sell the assets of our previously planned Statesboro Plant which have been classified as assets held for sale.

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Impairment of Property, Plant and Equipment

During the fiscal year ended December 31, 2025, impairment of property, plant and equipment consists of impairment incurred on our previously planned Statesboro Plant and impairment of other property, plant and equipment in connection with a restructuring action.

During the fiscal year ended December 31, 2024, the impairment of equipment under development was the result of a charge for impairment of assets due to obsolescence following the development of new and more efficient equipment.

Interest Expense, Convertible Note - Related Party

Interest expense, convertible note - related party is net of the capitalized interest related to the $100.0 million in aggregate principal amount of our 2022 Convertible Note.

Interest Income (Expense)

Interest expense consists of interest expense and amortization or write-off of deferred financing costs related to our other financing arrangements, including our Amended MidCap Loan Facility, a failed sale and leaseback arrangement accounted as a financing transaction and interest earned on the cash balances invested in deposit accounts, money market accounts, and high-quality debt securities issued by the U.S. government.

Loss on Extinguishment of Debt

On August 19, 2024, we entered into a note purchase and sale agreement (the Note Repurchase Agreement) with Wood River, LLC (Wood River), an entity affiliated with Koch Disruptive Technologies, LLC (Koch), pursuant to which we repurchased from Wood River $123.9 million in aggregate capitalized principal amount (inclusive of PIK interest paid through June 30, 2024) of the 2022 Convertible Note, such aggregate amount being the entire outstanding amount of the 2022 Convertible Note, for a total purchase price of $150.0 million in cash, which amount equals to the Redemption Price (as defined in the 2022 Convertible Note). Pursuant to the Note Repurchase Agreement, all rights and obligations, covenants and agreements under the 2022 Convertible Note and the Note Purchase Agreement were satisfied and discharged. The Redemption Price less capitalized principal amount and accrued interest to redemption date, of $24.6 million along with unamortized deferred issuance costs was classified in the income statement as Loss on Extinguishment of Debt.

Income from Employee Retention Credit

Employee retention credit consists of other income related to our submitted filings for employee retention credits under the Coronavirus Aid, Relief and Economic Safety Act (the Employee Retention Credits).

Provision for Income Taxes

We have incurred net losses since inception with the exception of the year ended December 31, 2024, and have not recorded benefit provisions for U.S. federal income taxes or state income taxes since the tax benefits of our net losses have been offset by valuation allowances due to the uncertainty associated with the utilization of net operating loss carryforwards. We record tax expenses in connection with our Mexican maquiladora operations.

At December 31, 2025, we had $372.3 million of net operating losses available to offset future federal income tax, if any, of which $145.0 million expire on various dates through December 31, 2037. Net operating losses of $227.3 million generated from 2018 through 2025 have an unlimited carryforward.

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Results of Operations

The following tables set forth our results of operations for the periods presented:

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Year ended December 31, 2025 compared to year ended December 31, 2024

The following tables set forth our results of operations for the periods presented:

Revenue

Total revenue decreased $181.6 million, or 40%, to $271.1 million in 2025 from $452.7 million in 2024. The decrease in total revenue was the result of decreases in both energy industrial and thermal barrier revenue.

Energy industrial revenue decreased by $43.7 million, or 30%, to $102.2 million in 2025 from $145.9 million in 2024. This decrease was driven by a decrease in revenue from the global petrochemical and refinery markets of North America, Europe, and Latin America, and in project-based demand in the subsea market, offset in part by an increase in revenue from the global petrochemical and refinery market of Asia.

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Energy industrial revenue for the years ended December 31, 2025 and 2024 included $24.1 million and $28.8 million in sales to Distribution, respectively. The average selling price per square foot of our products decreased by $0.16, or 3%, to $4.95 per square foot for the year ended December 31, 2025, from $5.11 per square foot for the year ended December 31, 2024. The decrease in average selling price reflected a change in the mix of products sold. This decrease in average selling price had the effect of decreasing product revenue by approximately $3.3 million for the year ended December 31, 2025.

In volume terms, product shipments decreased by 7.9 million square feet, or 28%, to 20.6 million square feet of aerogel products for the year ended December 31, 2025, as compared to 28.5 million square feet for the year ended December 31, 2024. The decrease in product volume had the effect of decreasing product revenue by approximately $40.4 million for the year ended December 31, 2025.

Thermal barrier revenue decreased by $137.9 million, or 45%, to $168.9 million in 2025 from $306.8 million in 2024. Thermal barrier revenue for the year ended December 31, 2025 included $160.3 million to a major U.S. automotive OEM. Thermal barrier revenue for the year ended December 31, 2024 included $291.2 million to a major U.S. automotive OEM and $5.9 million to a major Asian automotive OEM.

Energy industrial revenue as a percentage of total revenue was 38% and 32% of total revenue in 2025 and in 2024, respectively. Thermal barrier revenue was 62% and 68% of total revenue in 2025 and in 2024, respectively.

Cost of Revenue

Total cost of revenue decreased $44.7 million, or 17%, to $225.1 million in 2025 from $269.8 million in 2024 driven by declines in both thermal barrier and energy industrial cost of revenues.

Energy industrial cost of revenue decreased $22.4 million, or 26%, to $65.0 million from $87.4 million in the comparable period in 2024. The $22.4 million decrease was the result of a $13.7 million decrease in material costs and an $8.7 million decrease in manufacturing and other operating costs due to lower volume in comparison to the same period in 2024.

Thermal barrier cost of revenue decreased $22.3 million to $160.1 million as compared to $182.4 million in the comparable period in 2024. The $22.3 million decrease was the result of a $44.4 million decrease in material cost, partially offset by accelerated depreciation of $22.1 million on certain assets whose useful lives were lowered to align utilization with revised expected demand. Material costs decreased primarily due to lower volume and operational efficiencies generating lower scrap.

Gross Profit

Gross profit decreased $136.9 million, or 75%, to $46.0 million in 2025 from $182.9 million in 2024. The decrease in gross profit was the result of the $181.6 million decrease in total revenue, partially offset by the $44.7 million decrease in total cost of revenue.

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Research and Development Expenses

Research and development expenses decreased by $4.7 million, or 26%, to $13.4 million in 2025 from $18.1 million in 2024. The $4.7 million decrease was the result of decreases in compensation and related costs of $4.4 million, driven by a headcount reduction, operating supplies and equipment of $0.4 million, and professional fees of $0.2 million, partially offset by an increase in other expenditures of $0.3 million.

Research and development expenses as a percentage of total revenue increased to 5% during the year ended December 31, 2025 from 4% in the comparable period in 2024 primarily due to the 40% decrease in revenue from the comparable period in 2024.

Sales and Marketing Expenses

Sales and marketing expenses decreased by $7.5 million, or 21%, to $28.2 million in 2025 from $35.7 million in 2024. The decrease was the result of decreases in compensation and related costs of $5.2 million, driven by a headcount reduction, employee-related expenses of $1.0 million, marketing expenses of $0.6 million, operating supplies and equipment of $0.5 million, and other expenditures of $0.2 million.

Sales and marketing expenses as a percentage of total revenue increased to 10% in 2025 from 8% in 2024 primarily due to the 40% decrease in revenue from the comparable period in 2024.

General and Administrative Expenses

General and administrative expenses decreased by $15.3 million, or 22%, to $55.8 million in 2025 from $71.1 million in 2024. The $15.3 million decrease was the result of decreases in compensation and related costs of $15.9 million, driven by a headcount reduction, employee-related expenses of $0.7 million, foreign currency transaction losses of $2.4 million and professional fees of $1.6 million, partially offset by an increase in bad debt expense of $3.3 million, utilities expenses of $1.7 million and other expenditures of $0.3 million. Compensation and related costs for the year ended December 31, 2024 included $2.0 million of charge from the cancellation of the unearned performance-based restricted shares.

General and administrative expenses as a percentage of total revenue increased to 21% in 2025 from 16% in 2024 primarily due to the 40% decrease in revenue from the comparable period in 2024.

Restructuring and demobilization costs

In February 2025, we announced and began implementing a restructuring plan to realign our operational focus to improve costs and align capital expenditure to anticipated long term demand. The plan included reducing our headcount and ceasing construction of our previously planned Statesboro Plant. In connection with the demobilization, we are no longer pursuing our application for a loan from the Department of Energy's Loan Programs Office and have withdrawn from the loan application process. During each of the three months ended June 30, 2025, September 30, 2025 and December 31, 2025, we announced further headcount reductions to realign our operations and to improve costs. Restructuring and demobilization costs for the year ended December 31, 2025 include

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severance and other personnel costs of $8.2 million, facility closures and other costs associated with demobilization of $3.1 million and a write off of deferred financing costs of $6.2 million incurred in connection with pursuing financing for the construction of the Statesboro Plant. We did not incur restructuring and demobilization costs for the year ended December 31, 2024.

Loss on Disposal of Property, Plant and Equipment

Loss on disposal of property, plant and equipment consists of $18.2 million in charges to remeasure at fair value less costs to sell the assets of our previously planned Statesboro Plant which have been classified as assets held for sale.

Impairment of property, plant and equipment

Impairment of property, plant and equipment costs increased $287.7 million, to $291.2 million, for the year ended December 31, 2025 from $3.5 million in the comparable period in 2024. The increase was due to impairment of $286.6 million on our previously planned Statesboro Plant and impairment of $4.6 million incurred on research and development equipment and construction in progress that are no longer needed due to lower forecasted demand in the Thermal Barrier business. Impairment of $3.5 million for the comparable period in 2024 was the result of a charge for impairment of assets due to obsolescence following development of new and more efficient equipment.

Other Income (Expense), net

The $7.6 million decrease in interest expense, related party for the year ended December 31, 2025 is the result of the repurchase of the 2022 Convertible Note in August 2024.

The $6.3 million increase in interest expense, net for the year ended December 31, 2025 is the result of a $9.9 million increase in interest expense from the Amended MidCap Loan Facility and sale and leaseback transactions, offset by $1.8 million of deferred financing costs written off related to the loan agreement with GM (the GM Loan Agreement) during the three months ended March 31, 2024 which did not repeat during the comparable period, and an increase in interest income of $1.8 million.

The $27.5 million loss on extinguishment of debt for the year ended December 31, 2025 is the result of the repayment of the 2022 Convertible Note in August 2024.

The $1.8 million increase in other income for the year ended December 31, 2025 is primarily due to a $1.1 million legal settlement payment to us.

Income Tax Expense

The $2.4 million of income tax expense for the year ended December 31, 2025 consists of $2.1 million relating to our maquiladora operations in Mexico and a provision for state income taxes of $0.3 million. We incurred $1.7 million of income tax expense related to our maquiladora operations in Mexico for the comparable period in 2024.

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Year ended December 31, 2024 compared to year ended December 31, 2023

The following tables set forth our results of operations for the periods presented:

Revenue

Total revenue increased $214.0 million, or 90%, to $452.7 million in 2024 from $238.7 million in 2023. The increase in total revenue was the result of increases in both energy industrial and thermal barrier revenue.

Energy industrial revenue increased by $17.3 million, or 13%, to $145.9 million in 2024 from $128.6 million in 2023. This increase was driven by a more favorable mix of product shipments in the global petrochemical and refinery markets, particularly in North America, Latin America, and Europe, offset, in part, by a decrease in maintenance-based demand in the global petrochemical and refinery markets in Asia and project-based demand in the subsea market.

Energy industrial revenue for the years ended December 31, 2024 and 2023 included $28.8 million and $33.6 million in sales to Distribution, respectively. The average selling price per square foot of our products increased by $0.58, or 13%, to $5.11 per square foot for the year ended December 31, 2024, from $4.53 per square foot for the year ended December 31, 2023. The increase in average selling price reflected the impact of price increases enacted in 2024 and a change in the mix of products sold, as we strived to maximize capacity in our aerogel manufacturing facility. This increase in average selling price had the effect of increasing product revenue by approximately $16.6 million for the year ended December 31, 2024.

In volume terms, product shipments increased by 0.1 million square feet, or 1%, to 28.5 million square feet of aerogel products for the year ended December 31, 2024, as compared to 28.4 million square feet in the year ended December 31, 2023. The increase in product volume had the effect of increasing product revenue by approximately $0.7 million for the year ended December 31, 2024.

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Thermal barrier revenue was $306.8 million for the year ended December 31, 2024, as compared to $110.1 million for the year ended December 31, 2023. Thermal barrier revenue for the year ended December 31, 2024 included $291.2 million to a major U.S. automotive OEM and $5.9 million to a major Asian automotive OEM. Thermal barrier revenue for the year ended December 31, 2023 included $97.5 million to a major U.S. automotive OEM and $5.5 million to a major Asian automotive OEM.

Energy industrial revenue as a percentage of total revenue was 32% and 54% of total revenue in 2024 and in 2023, respectively. Thermal barrier revenue was 68% and 46% of total revenue in 2024 and in 2023, respectively.

Cost of Revenue

Total cost of revenue increased $88.0 million, or 48%, to $269.8 million in 2024 from $181.8 million in 2023. The increase in total cost of revenue was the result of an increase in thermal barrier, offset, in part, by a decrease in energy industrial cost of revenue.

Energy industrial cost of revenue decreased $7.1 million, or 7%, to $87.4 million from $94.5 million in the comparable period in 2023. The $7.1 million decrease was the result of a $20.1 million decrease in manufacturing and other operating costs and a $13.0 million increase in material costs from the comparable period in 2023. The decrease in manufacturing and other operating costs and increase in material costs was the result of lower volume of energy industrial products manufactured at our plant as we moved manufacturing to the external manufacturing facility.

Thermal barrier cost of revenue increased $95.1 million to $182.4 million as compared to $87.3 million in the comparable period in 2023. The $95.1 million increase was the result of a $23.6 million increase in manufacturing costs and a $71.5 million increase in material costs resulting from the increase in volume from the comparable period in 2023.

Gross Profit

Gross profit increased $126.0 million, or 221%, to $182.9 million in 2024 from $56.9 million in 2023. The increase in gross profit was the result of the $214.0 million increase in total revenue, partially offset by the $88.0 million increase in total cost of revenue. The increase in total cost of revenue was principally driven by the increase in material costs due to higher volume and overhead costs and additional resources to support our expected higher run-rate revenue in future periods for both our energy industrial and thermal barrier products.

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Research and Development Expenses

Research and development expenses increased by $1.7 million, or 10%, to $18.1 million in 2024 from $16.4 million in 2023. The $1.7 million increase was the result of increases in compensation and related costs of $1.0 million, depreciation and facility related expenses of $0.3 million, utilities expenses of $0.2 million, and other expenses of $0.2 million.

Research and development expenses as a percentage of total revenue decreased to 4% during the year ended December 31, 2024 from 7% in the comparable period in 2023 primarily due to the 90% increase in revenue from the comparable period in 2023.

Sales and Marketing Expenses

Sales and marketing expenses increased by $2.7 million, or 8%, to $35.7 million in 2024 from $33.0 million in 2023. The increase was the result of increases in depreciation and facility related expenses of $0.7 million, travel related expenses of $0.7 million, compensation and related costs of $0.6 million, utilities expenses of $0.4 million, and other expenses of $0.3 million.

Sales and marketing expenses as a percentage of total revenue decreased to 8% in 2024 from 14% in 2023 primarily due to the 90% increase in revenue from the comparable period in 2023.

General and Administrative Expenses

General and administrative expenses increased by $14.3 million, or 25%, to $71.1 million in 2024 from $56.8 million in 2023. The $14.3 million increase was the result of additional staffing costs combined with increases in compensation and related costs of $5.6 million, foreign currency transaction losses of $3.4 million, insurance costs of $2.7 million, utilities expenditures of $2.3 million, and other costs of $0.3 million. Compensation and related costs included a $2.0 million charge from the cancellation of the unearned performance-based restricted shares.

General and administrative expenses as a percentage of total revenue decreased to 16% in 2024 from 24% in 2023 primarily due to the 90% increase in revenue from the comparable period in 2023.

Impairment of Property, Plant and Equipment

The $3.5 million impairment of property, plant and equipment for the year ended December 31, 2024 was the result of a charge for impairment of assets due to obsolescence following development of new and more efficient equipment.

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Other Income (Expense), net

Other income (expense), net decreased by $42.8 million to $39.4 million in 2024 from $3.4 million in 2023. The $42.8 million increase was the result of a $27.5 million loss on extinguishment of debt, $6.1 million net impact of capitalized interest relating to our 2022 Convertible Note in the comparable period in 2023, $1.8 million of deferred financing costs related to the GM Loan Agreement (which was terminated on August 16, 2024), $2.2 million of income from Employee Retention Credits in the comparable period in 2023 not repeated in 2024, a $0.9 million decrease of interest income, and a $4.3 million increase of interest expense.

Income Tax Expense

The $1.7 million of income tax expense for the year ended December 31, 2024 was related to our maquiladora operations in Mexico. We did not incur income tax expense for the comparable period in 2023.

Liquidity and Capital Resources

Overview

We have experienced significant losses and invested substantial resources since our inception to develop, commercialize and protect our aerogel technology and to build a manufacturing infrastructure capable of supplying aerogel products at the volumes and costs required by our customers. These investments have included research and development and other operating expenses, capital expenditures, and investment in working capital balances.

On August 19, 2024, we entered into the Credit Agreement with the Agent and the Lenders, as subsequently amended. The Amended MidCap Loan Facility under the Credit Agreement is comprised of (i) the Term Loan Facility in an aggregate principal amount of $125.0 million and (ii) the Revolving Facility in an aggregate principal amount not to exceed the lesser of $100.0 million and the value of the Borrowing Base (as defined in the Credit Agreement). At closing of the Credit Agreement, the Company drew $125.0 million from the Term Loan Facility and $43.0 million from the Revolving Facility. The proceeds of the borrowings at closing, net of fees and costs, were used for repurchasing the 2022 Convertible Notes for $150.0 million and for general corporate purposes.

In October 2024, we entered into an underwriting agreement with Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC (the Underwriters), pursuant to which we issued and sold an aggregate of 4,887,500 shares of our common stock, which included 637,500 shares pursuant to the Underwriters’ option to purchase additional shares of our common stock, to the Underwriters in an underwritten registered direct offering (the Offering). The price to the public in the Offering was $20.00 per share. The net proceeds to us from the Offering were approximately $93.2 million, after deducting underwriting discounts and commissions and offering expenses payable by us.

In January 2024 and September 2024, we entered into sale and leaseback arrangements, pursuant to which we sold certain equipment to an equipment leasing company for one-time cash payments of $5.0 million and $10.0 million, respectively, and leased back such equipment from the leasing company. The associated monthly lease rents will be paid over the lease term of three years.

We believe that our December 31, 2025 cash and cash equivalents balance of $156.9 million will be sufficient to support current operating requirements, current research and development activities and capital expenditures required to support our existing business in the energy industrial and EV markets for at least 12 months from the date of this Annual Report on Form 10-K.

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However, we may supplement our cash balance and available credit with equity financings, debt financings, equipment leasing, sale-leaseback transactions, customer prepayments or government grant and loan programs to provide the additional capital necessary to support our long-term growth strategy.

We believe that consummation of equity financings could potentially result in an ownership change under Section 382 of the Internal Revenue Code. Such an ownership change would lead to the use of our net operating loss carryforwards being restricted. Our inability to use a substantial portion of our net operating loss carryforwards would result in a higher effective tax rate and adversely affect our financial condition and results of operations.

Primary Sources of Liquidity

Our principal sources of liquidity are currently our cash and cash equivalents, availability under the Revolving Facility, and cash generated by ongoing operations. Cash and cash equivalents consist primarily of cash, money market accounts, and sweep accounts on deposit with banks. As of December 31, 2025, we had $156.9 million of cash and cash equivalents and $9.5 million of availability under the Revolving Facility.

See “Risk Factors - Risks Related to Our Business and Strategy – We will require additional capital to pursue our growth strategy, but we may not be able to obtain additional financing on acceptable terms or at all” in this Annual Report on Form 10-K for the year ended December 31, 2025.

Analysis of Cash Flow

The following table summarizes our cash flows for the periods indicated:

Operating Activities

During 2025, we generated $32.9 million in net cash from operating activities, as compared to the generation of $45.5 million in net cash during 2024, a decrease in cash provided by operations of $12.6 million. This decrease in the cash provided by operations was the result of a decrease in net income adjusted for non-cash items of $112.1 million, offset by a decrease in cash used by changes in working capital of $99.5 million.

During 2024, we generated $45.5 million in net cash from operating activities, as compared to the use of $42.6 million in net cash during 2023, a decrease in the use of cash of $88.2 million. This decrease in the use of cash was the result of net income adjusted for non-cash items of $108.0 million, and a decrease in cash used by changes in working capital of $19.8 million.

Investing Activities

Net cash used in investing activities is for capital expenditures for machinery and equipment principally to improve the throughput, efficiency and capacity of our East Providence facility, our automated fabrication facility in Mexico and construction costs for the previously planned Statesboro Plant. Net cash used in investing activities for 2025 and 2024 totaled $37.4 million and $86.3 million, respectively.

Financing Activities

Net cash used in financing activities in 2025 totaled $58.1 million and consisted of $28.0 million in cash used for the repayment of the Revolving Facility, $26.0 million for the repayment of the Term Loan Facility, $5.2 million in repayments of the finance obligation under the sale and leaseback transaction, $0.8 million for payments made for employee tax withholdings associated with the

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vesting of RSUs, which were partially offset by proceeds of $1.7 million from employee stock option exercises, $0.2 million in proceeds from employee stock purchase plan purchases and less than $0.1 million in cash used for fees and issuance costs.

Net cash provided by financing activities in 2024 totaled $122.0 million and consisted of $14.9 million in proceeds from a sales leaseback, $10.4 million in proceeds from employee stock option exercises, $120.1 million in proceeds from the Term Loan, net of issues costs, and $42.1 in proceeds from the revolving line of credit, net of issuance costs, $93.2 million in proceeds from the registered direct offering of common stock, net of issuance costs, partially offset by $150.0 million in cash used for the repayment of the 2022 Convertible Note, $6.5 million in cash used for repayments from the Term Loan Facility, $1.3 million in cash used for payments made for employee tax withholdings associated with the vesting of RSUs, and $0.9 million in repayments of a sales leaseback.

Capital Spending and Future Capital Requirements

We have made capital expenditures primarily to develop and expand our manufacturing capacity. Our capital expenditures totaled $37.4 million in 2025, $86.3 million in 2024 and $175.5 million in 2023. As of December 31, 2025, we had capital commitments of approximately $12.3 million, which included commitments for which we have entered into contracts as well as commitments authorized by our Board of Directors. These commitments relate to the enhancement of our existing production lines in our East Providence facility and our fabrication operation in Mexico, and consist primarily of costs for equipment.

As indicated in the overview of the liquidity and capital resources section, to meet expected demand for our aerogel products, we plan to make additional productivity improvements in our existing East Providence facility and utilize a flexible supply strategy, including but not limited to use of our external manufacturing capabilities in China, which currently supports our Energy Industrial segment and are capable of delivering increased aerogel production capacity. Accordingly, we expect to be able to substantially reduce our planned capital expenditures for 2026.

We intend to fund capital expenditures related to additional productivity improvements in our manufacturing facility with our existing cash balance and anticipated cash flows from operations.

Contractual Obligations and Commitments

Operating Leases

We lease office space for our corporate offices in Northborough, Massachusetts, which expires in 2031. We also lease additional facilities in East Providence, Rhode Island; Marlborough, Massachusetts; Monterrey, Mexico; and Pawtucket, Rhode Island for research, administrative, fabrication, and warehousing purposes under leases expiring between July 31, 2026 and April 30, 2034. See “Item 2 — Properties.” We also lease vehicles and equipment under non-cancelable operating leases that expire at various dates.

Thermal Barrier Contract

We are party to production contracts with GM to supply fabricated, multi-part thermal barriers (the Barriers) for use in the battery system of its current and next-generation EVs (the Contracts). Pursuant to the Contracts, we are obligated to supply Barriers at fixed annual prices and at volumes to be specified by the OEM up to a daily maximum quantity through the respective terms of the agreements, which expire at various times from 2030 through 2034 and, in certain cases, may be extended by GM. While the OEM has agreed to purchase its requirement for Barriers for locations to be designated from time to time by the OEM, it has no obligation to purchase any minimum quantity of Barriers under the Contracts. In addition, the OEM may terminate the Contracts any time and for any or no reason. All other terms of the Contracts are generally consistent with the OEM’s standard purchase terms, including quality and warranty provisions customary in the automotive industry.

MidCap Loan Facility

On August 19, 2024, we and Aspen RI entered into the Credit Agreement and the facilities provided thereunder, by and among the Borrowers, the Agent, the Term Loan Servicer, the Lenders, and the other parties party thereto as additional guarantors and/or borrowers from time to time. The proceeds of the MidCap Loan Facility were used to repurchase our outstanding convertible note that was issued to Wood River, an entity affiliated with Koch, the payment of related fees and expenses and for working capital. Loans borrowed under the Amended MidCap Loan Facility mature on August 19, 2029.

On May 6, 2025, the Borrowers and Aspen Georgia entered into Amendment No. 1, by and among the Borrowers, Aspen Georgia, the Agent and the Lenders party thereto, amending the MidCap Loan Facility, and on December 16, 2025, the Loan Parties

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entered into Amendment No. 2, by and among the Loan Parties, the Agent, the Term Loan Servicer, and the Lenders party thereto, which amends that certain Credit, Security and Guaranty Agreement, dated as of August 19, 2024, by and among the Credit Parties, the Agent, the Term Loan Servicer, the Lenders, and the other parties party thereto as additional guarantors and/or borrowers from time to time.

The Amended MidCap Loan Facility is guaranteed by Aspen Mexico and Aspen Georgia and is secured by a lien on substantially all existing and after-acquired assets of the Loan Parties, including the equity interest in Aspen RI, Aspen Mexico and Aspen Georgia owned by us, in each case, subject to customary exceptions.

Pursuant to Amendment No. 1, the financial covenants under the MidCap Loan Facility were amended such that (a) the minimum Liquidity (as defined in the Amended MidCap Loan Facility) which must be maintained at all times has changed from $75 million to an amount equal to the greater of (i) $50 million and (ii) 85% of the then aggregate outstanding principal amount of the Term Loan Facility and (b) the minimum EBITDA level to be tested quarterly has changed to reflect a new range from $15 million to $50 million, with the next test set at $15 million with respect to the fiscal quarter ended March 31, 2026 and a $50 million level applicable commencing with the fiscal quarter ended December 31, 2027 and thereafter. The Liquidity amount trigger of a cash dominion event was also reduced from $100 million to an amount equal to the greater of (i) $50 million and (ii) 85% of the then aggregate outstanding principal amount of the Term Loan Facility. In addition, the Amended MidCap Loan Facility includes representations and warranties, affirmative covenants (including reporting obligations), negative covenants and events of default that are usual and customary for facilities of this type, in each case, subject to certain permitted exceptions as set forth therein.

Pursuant to Amendment No. 2, the financial covenants under the MidCap Loan Facility have been amended such that (a) the applicable minimum liquidity threshold (both for (i) the minimum liquidity financial covenant, which must be maintained by the Company at all times and (ii) the “Cash Dominion Event” definition for purposes of triggering cash dominion) has changed from (i) an amount equal to the greater of (x) $50 million and (y) 85% of the then aggregate outstanding principal amount of the Term Loan (as defined in the Amended MidCap Loan Facility) to (ii) an amount equal to the greater of (x) $50 million and (y) 100% of the then aggregate outstanding principal amount of the Term Loan and (b) the minimum EBITDA (as defined in the Amended MidCap Loan Facility) financial maintenance covenant has been removed entirely.

In addition, the mandatory prepayment provisions were revised to make clear that any mandatory prepayment of the loans under the MidCap Loan Facility made with proceeds of an asset sale will be used to reduce the Company’s required amortization payments in direct order of maturity, and the basket for making permitted acquisitions under the MidCap Loan Facility was reduced.

Convertible Note - Related Party

On August 19, 2024, we entered into the Note Repurchase Agreement with Wood River, pursuant to which we repurchased from Wood River $123.9 million in aggregate capitalized principal amount of the 2022 Convertible Note, such aggregate amount being the entire outstanding amount of the 2022 Convertible Note, for a total purchase price of $150.0 million in cash, which amount equals to the Redemption Price (as defined in the 2022 Convertible Note). Pursuant to the Note Repurchase Agreement, all rights and obligations, covenants and agreements under the 2022 Convertible Note and the underlying note purchase agreement were satisfied and discharged.

Purchase Commitments

As of December 31, 2025, we had purchase commitments of approximately $36.2 million, which included capital commitments of $12.3 million. Purchase commitments related to capital expenditures are anticipated to be spent over the next three years, while our remaining purchase commitments are anticipated to be spent throughout 2026.

Purchase obligations relate primarily to open purchase orders for capital expenditures, inventories, and goods and services. Purchase obligations are entered into with various vendors in the normal course of business and are consistent with our expected requirements.

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, we evaluate the pronouncements to determine the potential effects of adoption to our consolidated financial statements.

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Standards Implemented Since December 31, 2024

In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740) Improvements to Income Tax Disclosures (ASU 2023-09) that requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures including additional information about income taxes paid. Topic 740 is effective for fiscal year 2025. Effective January 1, 2025, we adopted ASU 2023-09 on a prospective basis. See Note (17) to the consolidated financial statements for more information.

Standards to be Implemented After December 31, 2025

Although there are several other new accounting pronouncements issued by the FASB, we do not believe any of these accounting pronouncements had or will have a material impact on our consolidated financial statements.

We believe that the impact of recently issued accounting standards that are not yet effective will not have a material impact on our consolidated financial statements.

Critical Accounting Policies and Estimates

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of our financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, revenue, costs and expenses and related disclosures. We believe that the estimates, assumptions and judgments involved in these accounting policies have the greatest potential impact on our financial statements; and therefore, we consider these to be our critical accounting policies. Accordingly, we evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions and conditions. See Note (2) to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for information about these critical accounting policies, as well as a description of our other significant accounting policies.

Stock-based Compensation

We maintain an equity incentive plan pursuant to which our Board of Directors may grant qualified and nonqualified stock options, restricted stock, RSUs and other stock-based awards to board members, officers, key employees and others who provide or have provided service to us.

We measure the costs associated with stock-based awards based on their estimated fair value at date of grant. We recognize the cost of stock-based awards as service, performance or market conditions are met. Future expense amounts for any particular quarterly or annual period could be affected by changes in our assumptions or changes in market conditions.

Stock Options

We use the Black-Scholes option-pricing model to estimate the fair value of stock option awards. The determination of the estimated fair value of stock option awards is based on a number of complex and subjective assumptions. These assumptions include the determination of the estimated fair value of the underlying security, the expected volatility of the underlying security, a risk-free interest rate, the expected term of the option, and the forfeiture rate for the award class. The following assumptions were used to estimate the fair value of the option awards:

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The expected term represents the period that our stock-based awards are expected to be outstanding and is determined using the simplified method described in ASC Topic 718, Compensation — Stock Compensation, for all grants. We believe this is a better representation of the estimated life than our actual limited historical exercise behavior.

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For the years ended December 31, 2025, 2024 and 2023, we used our historical volatility as a basis to estimate expected volatility in the valuation of stock options.

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The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life assumed at the date of grant.

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We use an expected dividend yield of zero, since we do not intend to pay cash dividends on our common stock in the foreseeable future, nor have we paid dividends on our common stock in the past.

For stock options that contain a market condition, we use a Monte-Carlo Simulation model to estimate the grant date fair value of awards expected to vest. We based the simulation model on the Black Scholes option-pricing model and a number of other complex assumptions including (i) whether the vesting condition would be satisfied within the time-vesting periods, and (ii) the date the common stock price target would be achieved per the terms of the agreement.

Inventory Valuation

Our inventories are stated at the lower of cost and net realizable value. We write down our inventories for estimated obsolescence equal to the difference between the cost of the inventory and its net realizable value based upon an aging analysis of the inventory on hand utilizing specific reserve percentages, specifically known inventory-related risks (such as technological obsolescence), and assumptions about future demand. Determining net realizable value and establishing reserves for excess and obsolete inventory require management to make estimates about future consumption of our products and how those expectations compare to our historical consumption experience. Because these assumptions may change as customer demand shifts, inventory valuation represents a critical accounting estimate.

In order to determine what costs can be included in the valuation of inventories, we determine normal capacity for our manufacturing facilities based on historical patterns. If our estimates regarding customer demand are inaccurate, or market conditions or technology change in ways that are less favorable than those projected by management, we may be required to take excess capacity charges in accordance with U.S. GAAP, which could have an adverse effect on our operating results.

No significant changes were made to the methodologies used to estimate inventory reserves during the year ended December 31, 2025.

Impairment of the Statesboro Plant

During the three months ended March 31, 2025, we recorded an impairment charge related to construction in progress associated with our Statesboro Plant construction project. The initial impairment was triggered by the decision, as part of a restructuring plan, to cease construction at our previously planned Statesboro Plant and demobilize the site, which required management to reassess the recoverability of the project’s capitalized costs based on updated estimates of future economic benefits. To support this assessment, management engaged an independent third-party valuation specialist to assist in determining fair value. This evaluation involved significant management judgment and resulted in recognition of an impairment charge.

At December 31, 2025, we recorded an additional loss based on updated information indicating that the fair value less cost to sell of the Statesboro Plant assets classified as held for sale were lower than their carrying value. Management again utilized the same independent third-party valuation specialist to update the fair value analysis which reflected changes in expected market conditions, potential buyer interest and estimated disposal costs.

Both the initial impairment and the subsequent loss required management to apply significant judgment in determining fair value. These assessments relied heavily on management’s judgment regarding expected market conditions and disposal costs, and changes in these assumptions could materially affect the valuation.

These charges were specific to events that occurred during the year ended December 31, 2025, and did not result in changes to our overall impairment policies or methodologies for evaluating long-lived assets.

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