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Item 7. Management’s Discussion and Analysis

2025-02-27 compared with 2024-03-07 · 455 added, 413 removed, 1094 unchanged (44% of the section changed)

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Our core businesses are organized into two reportable segments:

Energy Industrial and Thermal Barrier.

Thermal Barrier and Energy Industrial.

The following describes our key product offerings and new product innovations by reportable segment.

Thermal Barrier

We are actively developing a number of promising aerogel products and technologies for the electric vehicle (EV) market.

We have developed and are commercializing 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.

In addition, the Company's carbon aerogel initiative seeks to increase the performance of lithium-ion battery cells to enable EV manufacturers to reduce charging time and the cost of EVs.

The commercial potential for our PyroThin thermal barriers and our carbon aerogel initiative in the EV market is significant.

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 (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 both General Motors and Toyota, and thermal barrier prototype parts to a number of global manufacturers of EVs, grid storage and home battery systems.

During 2024, 2023 and 2022, we sold $306.8 million, $110.1 million and $55.6 million, respectively, of our PyroThin thermal barriers.

Energy Industrial

We design, develop and manufacture innovative, high-performance aerogel insulation used primarily in the energy industrial and sustainable insulation materials markets.

We also 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 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, LNG facilities, power generating assets and other energy industrial.

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.

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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.

Thermal Barrier

We are also actively developing a number of promising aerogel products and technologies for the EV market.

We have developed and are commercializing our proprietary line of PyroThin® aerogel thermal barriers for use in battery packs in EVs.

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.

In addition, we are seeking to leverage our patented carbon aerogel technology to develop industry-leading battery materials for use in lithium-ion battery cells.

These battery materials have the potential to increase the energy density of the battery cells, thus enabling an increase in the driving range of EVs.

The commercial potential for our PyroThin thermal barriers and our carbon aerogel battery materials in the EV market is significant.

Accordingly, we are hiring additional personnel, incurring additional operating expenses, incurring significant capital expenditures to expand aerogel manufacturing capacity, establishing an automated thermal barrier fabrication operation, enhancing research and development resources and expanding our battery material research facilities, among other items.

We have entered into production contracts with certain major OEMs, including General Motors LLC, or GM, to supply fabricated, multi-part thermal barriers for use in the battery system of its next-generation EVs.

Pursuant to the contracts with GM, we are obligated to supply the barriers at fixed annual prices and at volumes to be specified by the customer up to a daily maximum quantity through the term of the agreements, which expire at various times from 2026 through 2034.

While GM has agreed to purchase its requirement for the barriers from us at locations to be designated from time to time, it has no obligation to purchase any minimum quantity of barriers under the contracts.

In addition, GM may terminate the contracts any time and for any or no reason.

All other terms of the contracts are generally consistent with GM’s standard purchase terms, including quality and warranty provisions customary in the automotive industry.

We have also entered into production contracts with Toyota, Scania, ACC, a battery cell joint venture between Stellantis N.V, Saft-TotalEnergies and Mercedes-Benz, and Audi, a luxury brand of the Volkswagen Group.

Manufacturing Operations

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We have operated the East Providence facility since 2008 and have increased our capacity in phases.

To meet expected growth in demand for our aerogel products in the EV market, we have been in the process of expanding our aerogel blanket capacity by constructing a second manufacturing plant in Bulloch County, Georgia.

However, in order to manage the development of the second plant so that its increased capacity comes online in a manner that aligns with our current expectations as to demand from our EV customers, we are extending the timeframe for construction and commissioning of the second plant until such time as its capacity is supported by increased demand.

In the meantime, and until we ramp up construction, we expect to be able to substantially reduce our planned capital expenditures for 2024.

At the same time, we believe that productivity improvements in our existing Rhode Island facility combined with the supplemental supply of our energy industrial products from one or more external manufacturing facilities in China will permit us to achieve a target revenue capacity of approximately $650 million in 2024 and prior to the completion and start-up of the second plant.

Nonetheless, there can be no assurance as to when we will ramp up construction on the second plant.

There can also be no assurance that our contract manufacturing strategy of meeting the demand of our energy industrial customers with supply from one or more external manufacturing facilities in China will provide us with adequate manufacturing capacity or supply for that expected demand.

Furthermore, when we ramp up construction on the second plant, further cost inflation and/or supply chain disruptions, as well as potential changes in the scope of the facilities, could lead to increases to our prior estimated costs for completion of the second plant.

In 2023, we opened our 59,000-square-foot engineering and rapid prototyping facility in Marlborough, MA.

Our Advanced Thermal Barrier Center (ATBC) is designed to be the engineering hub of PyroThin cell-to-cell barriers, which help manufacturers optimize the safety and performance of battery packs for eMobility and energy storage system (ESS) markets.

Recent Developments

On September 28, 2023 (the “First Amendment Effective Date”), Aspen Aerogels Georgia, LLC, a Georgia limited liability company (the “Borrower”), our wholly-owned subsidiary, entered into a first amendment (the “First Amendment”) to amend that certain loan agreement, dated as of November 28, 2022 (the “Loan Agreement”), by and among (i) the Borrower, (ii) us, as a guarantor and (iii) Aspen Aerogels Rhode Island, LLC, a Rhode Island limited liability company (“Aspen RI” and, together with the Borrower and us, each, a “Loan Party” and collectively, the “Loan Parties”), as a guarantor, and (iv) General Motors Holdings LLC (“GM”), as lender.

Pursuant to the First Amendment, the Loan Parties and GM agreed to, among other things, (i) extend the draw period for the delayed draw senior secured term loans (the “Loan”), from beginning on January 1, 2023 and ending on September 30, 2023, to instead a period beginning on the date that is twelve (12) months prior to the date agreed upon by Borrower and GM for the start of production at an aerogel manufacturing facility in Bulloch County, Georgia (the “Plant”) under the applicable GM Purchase Contracts (as defined therein) and ending on March 31, 2024 (or any later date approved in writing by GM at its sole discretion);

(ii) extend the maturity date of the Loan Agreement from March 31, 2025 to September 30, 2025;

and (iii) add the following financial covenants measured starting from the fiscal quarter ending December 31, 2024 and at the end of each fiscal quarter thereafter (each such fiscal quarter end, a “Test Date”):

(A) a covenant requiring that the Total Leverage Ratio (as defined therein) shall not exceed 5.00:1.00 as of the applicable Test Date and (B) a covenant requiring that the ratio of our total indebtedness and our subsidiaries (with certain exceptions) to our consolidated equity shall not be greater than 1.20x as of the applicable Test Date, in each case, with compliance demonstrated through the submission of a certain compliance certificate (the “Financial Covenants”), subject to customary equity cure rights with respect to the Financial Covenants.

The First Amendment also amended the conditions precedent to funding to (i) require the Borrower to provide evidence that cash proceeds of one or more equity and/or debt financing arrangements of not less than $500.0 million in the aggregate (inclusive of all equity investments contributed to the Borrower for use in connection with the Plant prior to the First Amendment Effective Date) have been contributed to and disbursed by the Borrower in the manner prescribed in a pre-determined project budget (subject to a permitted variance) to fund the construction of and equipment for the first phase of the Plant and (ii) require that 70% of the total cost in connection with the construction and operation of the Plant has been fully funded prior to such applicable borrowing under the Loan Agreement.

During 2024, we converted our East Providence facility to support the growth of the thermal barrier program.

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 support Aspen’s Energy Industrial segment and are capable of delivering increased aerogel production capacity.

We expect that the productivity improvements in our existing East Providence facility as well as the supply from our external manufacturing facility will permit us to achieve our target revenue capacity in 2025.

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 have 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.

Pursuant to such contract, we pay Prodensa a management fee and have an option to purchase OPE from Prodensa after a period of 18 months.

As of December 31, 2024, we have notified Prodensa of our intent to purchase OPE.

We expect to meet our long-term Thermal Barrier program demand by maximizing capacity at our East Providence facility and utilizing a flexible supply strategy, including but not limited to using our external manufacturing capabilities, which currently support Aspen’s Energy Industrial segment and are capable of delivering increased aerogel production capacity.

Accordingly, we have ceased construction at our previously planned second manufacturing plant in Statesboro, Georgia.

We will be demobilizing the plant and are in the process of assessing options to derive value from the assets, including potentially relocating certain equipment to improve and expand our existing manufacturing facility in East Providence.

Underwritten Offering

In October 2024, we entered into an underwriting agreement (the Underwriting Agreement) with Goldman Sachs & Co.

LLC and Morgan Stanley & Co.

LLC (collectively, 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 a registered underwritten 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 estimated offering expenses payable by us.

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 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 have been used in connection with the transaction contemplated by the Note Repurchase Agreement (as defined below), the payment of related fees and expenses and for working capital of the Company and its subsidiaries.

Loans borrowed under the MidCap Loan Facility mature on August 19, 2029.

The MidCap Loan Facility is comprised of (i) a term loan facility in an aggregate principal amount of $125.0 million (the Term Loan Facility) and (ii) an asset-based revolving credit facility in an aggregate principal amount not to exceed the lesser of (A) $100.0 million and (B) the value of the borrowing base (defined as the sum of (x) 85% of certain eligible accounts of the Borrowers and (y) the lesser of 85% of the NOLV (as defined in the Credit Agreement) or 85% of the cost of certain eligible inventory of the Borrowers) (the Revolving Facility).

Loans borrowed under the Term Loan Facility will bear an interest rate equal to Term SOFR (as defined in the Credit Agreement) for a one-month interest period plus 4.50% per year, subject to a Term SOFR floor of 4.50% and a Term SOFR cap of 7.50%.

Loans borrowed under the Revolving Facility will bear an interest rate equal to Term SOFR plus 4.60% per year, subject to a Term SOFR floor of 2.50%.

The Term Loan Facility is subject to amortization of principal, payable quarterly on the last day of each quarter, commencing September 30, 2024, in an amount as set forth in the Credit Agreement with the remaining aggregate principal amount payable on the maturity date.

The Revolving Facility has a required minimum balance set at 30% of the average borrowing base during the immediate preceding month.

The Borrowers are required to pay the Lenders under the Revolving Facility an unused line fee of 0.30% of the average unused availability under the Revolving Facility, subject to the aforementioned minimum balance.

The MidCap Loan Facility is guaranteed by Aspen Aerogels Mexico Holdings 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 Aerogels Mexico Holdings and Aspen Aerogels Georgia owned by us, in each case, subject to customary exceptions.

Aspen Aerogels Georgia is not a guarantor (thus not a Loan Party) and its assets are excluded from the collateral under the MidCap Loan Facility, subject to its entrance into the DOE Loan Documents (as defined in the Credit Agreement) within one year from the closing date of the MidCap Loan Facility.

To the extent the DOE Loan Documents will not be entered into within such one-year period, Aspen Aerogels Georgia will be obligated to become a Loan Party under the MidCap Loan Facility and pledge substantially all of its assets as security for the obligations thereunder.

Repurchase of Convertible Note

On August 19, 2024, we entered into a note purchase and sale agreement (the Note Repurchase Agreement) with Wood River Capital, LLC (Wood River), an entity affiliated with Koch Disruptive Technologies, LLC, 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 Convertible Senior PIK Toggle Notes due 2027, dated February 18, 2022, as amended by Amendment No.

1 to Convertible Senior PIK Toggle Notes due 2027, dated November 28, 2022 (the Convertible Note), such aggregate amount being the entire outstanding amount of the Convertible Note, for a total purchase price of $150.0 million in cash, which amount equals to the Redemption Price (as defined in the Convertible Note).

Pursuant to the Note Repurchase Agreement, all rights and obligations, covenants and agreements under the Convertible Note and the underlying note purchase agreement were satisfied and discharged.

Financial Summary

On November 5, 2020, we entered into a sales agreement for an at-the-market (“ATM”) offering program with B.

Riley Securities as our sales agent.

During the year ended December 31, 2021, we sold 929,981 shares of our common stock through the ATM offering program with B.

Riley Securities and received net proceeds of $19.4 million.

On March 16, 2022, we entered into a sales agreement for an ATM offering program with Cowen and Company, LLC and Piper Sandler & Co., as our sales agents, or the 2022 ATM offering program.

On March 16, 2022, we entered into a sales agreement for an at-the-market offering program with Cowen and Company, LLC and Piper Sandler & Co., as our sales agents (the 2022 ATM offering program).

During the year ended December 31, 2022, we sold 5,241,400 shares of our common stock through the 2022 ATM offering program and received net proceeds of $72.7 million.

The 2022 ATM offering program was terminated on June 20, 2023.

On February 3, 2021, we entered into a supply agreement with Silbond Corporation for the purchase of certain silanes products.

Pursuant to the agreement, we agreed to purchase, and Silbond agreed to supply, all of our requirements for the specified silanes at our East Providence facility through the term of the agreement on September 30, 2023, unless either party terminates the agreement earlier pursuant to its terms.

In October 2022, we extended the agreement through December 31, 2023, and the agreement has subsequently terminated.

On June 29, 2021, we sold 3,462,124 shares to an affiliate of Koch, in a private placement of our common stock and received net proceeds of $73.5 million after deducting fees and offering expenses of $1.5 million.

On March 28, 2022, we sold to an affiliate of Koch, 1,791,986 shares of our common stock for aggregate gross proceeds of $50.0 million, pursuant to a securities purchase agreement, dated as of February 15, 2022, by and between us and the affiliate of Koch.

On February 18, 2022, we sold and issued to an affiliate of Koch $100.0 million in aggregate principal amount of our Convertible Senior PIK Toggle Notes due 2027, or the Notes, pursuant to a note purchase agreement, dated as of February 15, 2022, by and between us and the affiliate of Koch.

The Notes bear interest at the Secured Overnight Financing Rate, or SOFR, plus 5.50% per annum if interest is paid in cash, or the Cash Interest, or, if interest is paid in kind (through an increase in the principal amount of the outstanding Notes or through the issuance of additional Notes), at SOFR plus 6.50% per annum, or PIK Interest.

Under the terms of the investment, SOFR has a floor of 1% and a cap of 3%.

We can elect to make any interest payment through Cash Interest, PIK Interest or any combination thereof.

Interest on the Notes is payable semi-annually in arrears on June 30 and December 30, commencing on June 30, 2022.

It is expected that the Notes will mature on February 18, 2027, subject to earlier conversion, redemption or repurchase.

On November 28, 2022, in connection with the Loan Agreement (described below) we entered into an amendment to the Notes, or the Convertible Note Amendment, to reduce the initial Conversion Price (as defined in the Notes) by $5.00 per share from $34.936625 per share to $29.936625 per share, by increasing the initial Conversion Rate (as defined in the Notes) from 28.623257 shares per $1,000 of Capitalized Principal Amount (as defined in the Notes) to 33.400100 shares per $1,000 of Capitalized Principal Amount under the Notes.

On November 28, 2022, our wholly owned subsidiary, Aspen Aerogels Georgia, LLC, or the Borrower, entered into the Loan Agreement, by and between (i) the Borrower, (ii) Aspen Aerogels, Inc.

and (iii) Aspen RI, and, together with the Borrower and Aspen Aerogels, Inc., each, a Loan Party and collectively, the Loan Parties), as guarantors, and (iv) GM, as lender.

The Borrower is required to use the proceeds of the Loan in connection with the construction and operation of our planned aerogel manufacturing facility in Bulloch County, Georgia.

The Loan Agreement provides for a multi-draw senior secured term loan in an aggregate principal amount of up to $100.0 million, or the Loan, available to the Borrower to draw on a delayed draw basis after January 1, 2023 to September 30, 2023, subject to certain conditions precedent to funding.

The interest rate on the Loan is equal to the term Secured Overnight Financing Rate published by CME Group Benchmark Administration Limited for a six-month interest period, or Term SOFR, plus 8.0% per year, subject to a term SOFR floor of 1.0%, or the Floor, with a maturity date of the earlier of (i) March 31, 2025 and (ii) 90 days prior to the maturity date of any other debt facility to which the Loan Parties may be a party (other than any revolving loan agreement), or the Maturity Date.

At the Borrower’s election and prior to the issuance of a certificate of occupancy for the Plant, interest may be paid-in-kind at a rate equal to Term SOFR (subject to the Floor) plus 9.0% per year.

Refer to Recent Developments for details of the amendment to the Loan Agreement.

On November 29, 2022, we completed an underwritten public offering of 29,052,631 shares of our common stock at a public offering price of $9.50 per share.

We received net proceeds of $267.5 million after deducting underwriting discounts and commissions of $8.1 million and offering expenses of approximately $0.5 million.

On November 28, 2022, we terminated the Amended and Restated Loan and Security Agreement, or the SVB Loan Agreement, with Silicon Valley Bank, or SVB.

As of the date of termination, we had no amounts due or owed to SVB under the SVB Loan Agreement for any principal, interest, or other amounts, other than approximately $1.2 million in letters of credit that were issued under the SVB Loan Agreement and will be cash collateralized in connection with the termination of the SVB Loan Agreement.

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.

Square Foot Operating Metric

We price our energy industrial product and measure our shipments in square feet.

We believe the square foot operating metric allows us and our investors to measure our manufacturing capacity and energy industrial product shipments on a uniform and consistent basis.

The following chart sets forth energy industrial product shipments in square feet associated with recognized revenue, including revenue recognized over time, for the periods presented:

Year Ended December 31,

(Square feet in thousands)

Product shipments in square feet

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, which in 2021 included a gain on the extinguishment of debt.

Adjusted EBITDA is a supplemental measure of our performance that is not presented in accordance with U.S.

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($ in thousands)

Net income (loss)

Depreciation and amortization

Stock-based compensation (1)

Gain on the extinguishment of debt

Other (income) expense

Loss on extinguishment of debt

Income tax expense

Adjusted EBITDA

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($ in thousands)

Net income (loss)

Depreciation and amortization

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Other (income) expense

Loss on extinguishment of debt

Income tax expense

Adjusted EBITDA

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As a result, we experienced total revenue growth of 90% during the year.

We increased staffing and spending levels in support of the growing demand for our thermal barrier business and our carbon aerogel battery material opportunity in coming years.

We also increased staffing and spending to expand and defend our IP portfolio, and to enhance our general and administrative functions to manage the anticipated strong growth in our business.

We expect to maintain strong revenue growth during 2024 driven by accelerating demand in the EV market and continued market share gains in the sustainable insulation materials market.

Our expectation to maintain strong revenue growth is based, in part, on our OEM customers’ production volume forecasts and targets as well as our expectation to successfully scale our manufacturing capabilities and address any potential supply chain issues to meet this expected demand.

As a result, we expect to experience a decrease in both net loss and negative Adjusted EBITDA during 2024.

We also expect to incur reduced capital expenditures and expenses during 2024 related to our planned second aerogel manufacturing facility to be located in Bulloch County, Georgia.

We may, from time to time, enter into leasing arrangements including sale and leaseback financing arrangements.

In January 2024, we entered into a sale and leaseback arrangement, pursuant to which we sold certain equipment to an equipment leasing company (the “Leasing Company”) for a one-time cash payment of $5.0 million and leased back such equipment from the Leasing Company.

The associated monthly lease rents will be paid over the term of three years.

We intend to continue evaluating certain assets for potential sale and lease back arrangements in the future.

This type of arrangement would provide us with one-time cash payments in the near term, in exchange for future lease payments.

Our expectation for 2025 revenue is based, in part, on our OEM customers’ production volume forecasts and targets.

Our OEM customers operate in a cyclical industry that is sensitive to shifting consumer trends, political and regulatory uncertainty and economic conditions in the markets they operate.

EV adoption rates in some of our customers’ markets are expected to be at a slower rate than originally expected and EV investment continues to be re-timed as demand expectations in North America and Europe are reset.

However, some of our OEM customers have been gaining market share from a low base volume and expect to continue to gain market share in 2025.

Furthermore, changes are being considered to government and economic policies, incentives, and tariffs that may impact our customers and our production, sales, cost structure and the competitive landscape.

Additionally, our OEM customers continue to innovate which could result in engineering changes to the parts we supply primarily to reduce costs for our OEMs.

Cost-cutting initiatives adopted by our customers may result in increased downward pressure on pricing.

Accordingly, we expect thermal barrier revenues could range from a decline to moderately higher in 2025.

However, we are expecting an increase in energy industrial revenues.

We are projecting growth in energy industrial revenue due to expected volume growth in our core petrochemical and refinery markets, an anticipated increase in project-based demand and continued penetration of new markets.

We will continue to adjust to these developments, and we believe our ongoing cost reduction, including improved production innovation and efficiency, will continue to benefit us.

As a result, we expect to experience a decline to no or minimal growth in net income and Adjusted EBITDA during 2025.

We also expect to incur reduced capital expenditures during 2025.

We recognize revenue from the sale of our energy industrial aerogel products and thermal barriers.

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Thermal barrier

Energy industrial revenue accounted for 54%, 69%, and greater than 95% of total revenue for the years ended December 31, 2023, 2022 and 2021, respectively.

We experienced a 32% increase in total revenue during 2023 driven by the increase in our energy industrial business, particularly in Europe, and continued growth in the EV market.

We project revenue growth during 2024 due to accelerating demand in the EV market and continued market share gains in the sustainable insulation materials market.

Energy industrial revenue accounted for 32%, 54%, and 69% of total revenue for the years ended December 31, 2024, 2023 and 2022, respectively.

We experienced a 90% increase in total revenue during 2024 driven by the increase in our energy industrial business, particularly in North America, and continued growth in the EV market.

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.

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In 2024, sales to GM and Distribution International, Inc.

represented 41% and 14% of our total revenue, respectively.

In 2022, sales to GM and Distribution International, Inc.

represented 25% and 22% of our total revenue, respectively.

In 2021, sales to Distribution International, Inc.

represented 28% of our total revenue.

(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.

In 2022, sales to GM and Distribution represented 25% and 22% 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.

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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 also includes stock-based compensation of

manufacturing employees and shipping costs.

Manufacturing expense as a percentage of product revenue was 22%, 46% and 44% for the years ended December 31, 2024, 2023 and 2022, respectively.

We expect that manufacturing expense will increase in absolute dollars and decrease as a percentage of revenue during 2024 due to increased staffing and spending levels in support of our thermal barrier business, including the operation of an automated fabrication facility in Monterrey, Mexico.

We are also continuing to monitor the impact of engaging one or more external manufacturing facilities in China to supply our aerogel products for the energy industrial market beginning in 2024 on our manufacturing expense and cost of product revenue.

During 2024, we expect that cost of product revenue will increase in absolute dollars due to projected volume growth and a planned increase in staffing and spending levels, but decrease as a percentage of product revenue due to projected increases in average selling prices, improved manufacturing and fabrication yields and a favorable mix of products sold.

We expect that manufacturing expense will remain relatively flat in absolute dollars, due to ongoing cost reduction efforts, and increase as a percentage of revenue during 2025 due to lower expected revenues from the thermal barrier business, including the operation of an automated fabrication facility in Monterrey, Mexico.

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.

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.

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Gross profit as a percentage of total revenue was 40%, 24%, and 3% for the years ended December 31, 2024, 2023 and 2022, respectively.

During 2024, we expect gross profit to increase in both absolute dollars and as a percentage of total revenue due to the combination of a projected increase in total revenue combined with projected reduction in material costs and manufacturing expense as a percentage of total revenue.

In the longer term, we expect gross profit to improve in absolute dollars and as a percentage of revenue due to expected increases in total revenue, production volumes and manufacturing productivity.

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We also expect to continue to invest in research and engineering personnel and the infrastructure required in support of their efforts.

We expect our research and development expenses will increase in absolute dollars and decrease as a percentage of revenue in 2024 and the longer term.

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.

We expect our sales and marketing expenses will increase in absolute dollars but decrease as a percentage of revenue in 2024 and in the longer term.

General and Administrative Expenses

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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 expense over the medium to long-term.

We expect that our general and administrative expenses will increase in absolute dollars and decrease as a percentage of revenue.

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 Convertible Senior PIK Toggle Notes.

Other Income (Expense), Net

For the years ended December 31, 2023, 2022 and 2021, interest expense, net consists of interest expense related to our revolving credit facility and in 2022 and 2023, included interest earned on the cash balances invested in deposit accounts, money market accounts, and high-quality debt securities issued by the U.S.

Gain on Extinguishment of Debt

On May 1, 2020, our wholly-owned subsidiary, Aspen Aerogels Rhode Island, LLC, executed a note for an unsecured PPP loan of $3.7 million pursuant to the CARES Act.

On August 24, 2021, the SBA remitted $3.7 million in principal and accrued interest to the noteholder after approving the Aspen Aerogels Rhode Island, LLC’s application for forgiveness of the PPP Loan.

Accordingly, we recorded a total gain on the extinguishment of debt of $3.7 million during the year ended December 31, 2021.

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 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.

Loss on Extinguishment of Debt

On August 19, 2024, we entered into the Note Purchase Agreement, 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

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Provision for Income Taxes

We have incurred net losses since inception and have not recorded benefit provisions for U.S.

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, 2024, we had $315.3 million of net operating losses available to offset future federal income tax, if any, of which $156.3 million expire on various dates through December 31, 2037.

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General and administrative

Impairment of equipment under development

Total operating expenses

Loss from operations

Income (loss) from operations

Other income (expense)

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Interest income (expense), net

Gain on extinguishment of debt

Loss on extinguishment of debt

Income from Employee Retention Credits

Total other income (expense)

Income tax expense

Net income (loss)

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

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General and administrative

Impairment of equipment under development

Total operating expenses

Loss from operations

Income (loss) from operations

Other income (expense)

1 unchanged sentence

Interest income, net

Loss on extinguishment of debt

Income from Employee Retention Credits

Total other income (expense)

Income tax expense

Net income (loss)

Year Ended December 31,

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Total revenue

The following chart sets forth energy industrial product shipments in square feet associated with recognized revenue, including revenue recognized over time, for the periods presented:

Year Ended December 31,

Product shipments in square feet (in thousands)

Total revenue increased $214.0 million, or 90%, to $452.7 million in 2024 from $238.7 million in 2023.

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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 Latin America, project-based demand in the subsea market, offset, in part, by a decrease in maintenance-based demand in the global petrochemical and refinery markets in North America, Europe, and Asia.

Energy industrial revenue for the years ended December 31, 2023 and 2022, included $33.6 million and $39.3 million in sales to Distribution International, Inc., respectively.

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.

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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 decreased by 4.2 million square feet, or 13%, to 28.4 million square feet of aerogel products for the year ended December 31, 2023, as compared to 32.6 million square feet in the year ended December 31, 2022.

The decrease in product volume had the effect of decreasing product revenue by approximately $16.1 million for the year ended December 31, 2023.

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.

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.

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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 $11.5 million decrease was the result of a $11.4 million decrease in material costs and a $0.1 million decrease in manufacturing and other operating costs from the comparable period in 2022.

The decrease in material costs was the result of the lower revenue volume from the comparable period in 2022, and lower raw material costs in 2023 compared to 2022.

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 move 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 $17.9 million increase was the result of a $5.8 million increase in material costs and a $12.1 million increase in manufacturing costs.

The increase in material costs was the result of the increase in revenue volume from the comparable period in 2022, offset by lower raw material prices in 2023 compared to 2022.

The increase in manufacturing costs was driven by increases in depreciation and facility costs of $7.1 million and utilities expenses of $3.3 million and other manufacturing and operating costs of $1.7 million.

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.

Year Ended December 31,

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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 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.

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.

Research and Development Expenses

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Research and development expenses

Research and development expenses decreased by $0.5 million, or 3%, to $16.4 million in 2023 from $16.9 million in 2022.

The $0.5 million decrease was the result of decreases in professional fees of $1.5 million, operating material and supplies costs of $0.7 million, compensation and related costs of $0.6 million, partially offset by an increase in depreciation and facility related expenses of $2.1 million and other research and development expenses of $0.2 million.

Research and development expenses as a percentage of total revenue decreased to 7% during the year ended December 31, 2023 from 9% in the comparable period in 2022, primarily due to the decrease in professional fees.

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

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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 $2.9 million and compensation and related costs of $2.1 million, partially offset by a decrease in operating material and supplies costs of $0.8 million.

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.

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General and administrative expenses increased by $14.3 million, or 25%, to $71.1 million in 2024 from $56.8 million in 2023.

The $18.3 million increase was the result of increases in compensation and related costs of $15.3 million and professional fees of $3.6 million, offset by a decrease in other costs of $0.6 million.

General and administrative expenses as a percentage of total revenue increased to 24% in 2023 from 21% in 2022 primarily due to increased expenditures associated with the growth in our human resource, finance, information technology and general management organizations in preparation for the anticipated growth in our business.

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 include $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 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 Equipment Under Development

The $3.5 million impairment of equipment under development 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

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Interest expense, related party

Interest income, net

Interest income (expense), net

Loss on extinguishment of debt

Income from Employee Retention Credits

Total other income (expense), net

Other income (expense), net increased by $6.9 million to $3.4 million in 2023 from $(3.5) million in 2022.

The $6.9 million increase was the result of $4.9 million of interest income, $2.2 million of Employee Retention Credits and a $(0.2) million net impact of capitalized interest relating to our Convertible Note in the comparable period in 2022.

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 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), a $2.2 million 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 is related to our maquiladora operations in Mexico.

We did not incur income tax expense for the comparable period in 2023.

Year ended December 31, 2023 compared to year ended December 31, 2022

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Total revenue

The following chart sets forth product shipments in square feet associated with recognized revenue, including revenue recognized over time, for the periods presented:

Product shipments in square feet (in thousands)

Total revenue increased $58.3 million, or 32%, to $238.7 million in 2023 from $180.4 million in 2022.

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Energy industrial revenue increased by $3.8 million, or 3%, to $128.6 million in 2023 from $124.8 million in 2022.

This increase was driven by a more favorable mix of product shipments in the global petrochemical and refinery markets, particularly in Asia and North America, project-based demand in the subsea market, offset, in part, by a decrease in maintenance-based demand in the global petrochemical and refinery markets in Europe.

Energy industrial revenue for the years ended December 31, 2023 and 2022, included $33.6 million and $39.3 million in sales to Distribution International, Inc., respectively.

The average selling price per square foot of our products increased by $0.70, or 18%, to $4.53 per square foot for the year ended December 31, 2023, from $3.83 per square foot for the year ended December 31, 2022.

This increase in average selling price principally reflected the impact of a change in the mix of products sold.

The increase in average selling price reflected the impact of price increases enacted in 2023 and a change in the mix of products sold, as we strive to maximize capacity in our aerogel manufacturing facility.

This increase in average selling price had the effect of increasing product revenue by approximately $19.9 million for the year ended December 31, 2023.

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automotive OEM and $5.5 million to a major Asian automotive OEM.

Thermal barrier revenue for the year ended December 31, 2022 included $45.8 million to a major U.S.

automotive OEM and $5.1 million to a major Asian automotive OEM.

Energy industrial revenue as a percentage of total revenue was 54% and 69% of total revenue in 2023 and in 2022, respectively.

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Total cost of revenue increased $6.4 million, or 4%, to $181.8 million in 2023 from $175.4 million in 2022.

The increase in total cost of revenue was the result of an increases in thermal barrier and energy industrial cost of revenue.

Energy industrial cost of revenue increased $5.5 million, or 5%, to $106.0 million from $100.5 million in the comparable period in 2021.

The $5.5 million increase was the result of a $16.4 million increase in material costs, offset by a $10.9 million decrease in manufacturing and other operating costs from the comparable period in 2021.

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 $11.5 million, or 11%, to $94.5 million from $106.0 million in the comparable period in 2022.

The $11.5 million decrease was the result of a $11.4 million decrease in material costs and a $0.1 million decrease in manufacturing and other operating costs from the comparable period in 2022.

The decrease in material costs was the result of the lower revenue volume from the comparable period in 2022, and lower raw material costs in 2023 compared to 2022.

Thermal barrier cost of revenue increased $17.9 million to $87.3 million as compared to $69.4 million in the comparable period in 2022.

The $17.9 million increase was the result of a $5.8 million increase in material costs and a $12.1 million increase in manufacturing costs.

The increase in material costs was the result of the increase in revenue volume from the comparable period in 2021.

The increase in manufacturing was driven by increases in compensation and related costs of $11.7 million and other manufacturing and operating costs of $29.5 million.

The increase in material costs was the result of the increase in revenue volume from the comparable period in 2022, offset by lower raw material prices in 2023 compared to 2022.

Year Ended December 31,

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Total gross profit

Gross profit decreased $4.9 million, or 50%, to $5.0 million in 2022 from $9.9 million in 2021.

The decrease in gross profit was the result of the $63.7 million increase in total cost of revenue, partially offset by the $58.7 million increase in total revenue.

Gross profit increased $51.9 million, or 1,044%, to $56.9 million in 2023 from $5.0 million in 2022.

The increase in gross profit was the result of the $58.3 million increase in total revenue, partially offset by the $6.4 million increase in total cost of revenue.

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Research and development expenses

Research and development expenses increased by $5.5 million, or 48%, to $16.9 million in 2022 from $11.4 million in 2021.

The $5.5 million increase was the result of increases in compensation and related costs of $2.5 million, professional fees and materials costs of $1.1 million, equipment and lease costs of $0.9 million, depreciation expenses of $0.7 million and other research and development expenses of $0.3 million.

Research and development expenses as a percentage of total revenue was 9% during the years ended December 31, 2022 and 2021.

Research and development expenses decreased by $0.5 million, or 3%, to $16.4 million in 2023 from $16.9 million in 2022.

Sales and Marketing Expenses

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Sales and marketing expenses increased by $4.2 million, or 15%, to $33.0 million in 2023 from $28.8 million in 2022.

The increase was the result of increases in compensation and related costs of $7.2 million, operating material and supplies costs of $1.8 million, travel related costs of $1.6 million, marketing costs of $0.8 million and professional fees and other expenses of $0.8 million.

Sales and marketing expenses as a percentage of total revenue increased to 16% in 2022 from 14% in 2021 primarily due to elevated levels of compensation associated with an increase in sales and marketing personnel.

Sales and marketing expenses as a percentage of total revenue decreased to 14% in 2023 from 16% in 2022 primarily due to the 32% increase in revenue from the comparable period in 2022.

General and Administrative Expenses

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General and administrative expenses increased by $18.3 million, or 47%, to $56.8 million in 2023 from $38.5 million in 2022.

The $16.0 million increase was the result of increases in compensation and related costs of $8.8 million, professional fees and other costs of $3.3 million, leasing and facility costs of $1.5 million, information technology related costs of $1.3 million and legal related costs of $1.1 million.

The $18.3 million increase was the result of increases in compensation and related costs of $15.3 million and professional fees of $3.6 million, offset by a decrease in other costs of $0.6 million.

Interest Expense, net

Other Income (Expense), net

Year Ended December 31,

($ in thousands)

Interest expense:

Other income (expense):

Interest expense, related party

Interest income (expense), net

Total interest expense, net

Interest expense, net increased by $3.3 million to $3.5 million in 2022 from $0.2 million in 2021.

The $3.3 million increase was the result of increase in interest expense, related party by $5.1 million offset by increase in interest income, net of $1.8 million.

Increase in interest expense, related party of $5.1 million was the result of interest relating to our Convertible Note.

Interest income, net increased by $1.8 million to $1.6 million in 2022 from $(0.2) million in 2021 due to higher cash balances throughout 2022, in addition to more favorable interest rates.

Interest income, net

Income from Employee Retention Credits

Total other income (expense), net

Other income (expense), net increased by $6.9 million to $3.4 million in 2023 from $(3.5) million in 2022.

Liquidity and Capital Resources

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Our long-term financial projections anticipate revenue growth, increasing levels of gross profit, and improved cash flows from operations.

However, in order to manage the development of the second plant so that its increased capacity comes online in a manner that aligns with our current expectations of demand from our EV customers, we are extending the timeframe for construction and commissioning of the second plant until such time as its capacity is supported by increased demand.

In the meantime, and until we ramp up construction, we expect to be able to substantially reduce our planned capital expenditures for 2024.

Nonetheless, there can be no assurance as to when we will ramp up construction on the second plant.

We are also increasing our investment in the research and development of next-generation aerogel products and technologies.

During 2024, we will continue to develop aerogel products and technologies for the EV market.

We believe the commercial potential for our technology in the EV market is significant.

To meet the anticipated revenue growth and take advantage of this market opportunity, we are adding personnel, incurring additional operating expenses, and planning to construct a carbon aerogel battery materials facility, among other items.

Accordingly, we have ceased construction at our previously planned second manufacturing plant in Statesboro, Georgia.

On October 16, 2024, we announced that the U.S.

Department of Energy (DOE) Loan Programs Office provided us a conditional commitment for a proposed loan of up to $670.6 million (the Loan) under the Advanced Technology Vehicles Manufacturing loan program within DOE’s Loan Programs Office (LPO) for financing the construction of our previously planned second aerogel manufacturing facility (the Statesboro Plant) in Statesboro, Georgia.

On February 12, 2025, we announced that we had stopped construction on the Statesboro Plant and are demobilizing the project.

In connection with the demobilization, we are no longer pursuing our application for the Loan from the DOE’s LPO and have withdrawn from the Loan application process.

During the year ended December 31, 2022, we sold 5,241,400 shares of our common stock through the 2022 ATM offering program and received net proceeds of $72.7 million.

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We received net proceeds of $74.4 million, after deducting offering expenses of approximately $0.6 million.

We believe that our December 31, 2023 cash and cash equivalents balance of $139.7 million will be sufficient to support current operating requirements, current research and development activities and the initial capital expenditures required to support the evolving commercial opportunities in the EV market and other strategic business opportunities.

We may, from time to time, enter into leasing arrangements including sale and leaseback financing arrangements.

In January 2024, we entered into a sale and leaseback arrangement, pursuant to which we sold certain equipment to the Leasing Company for a one-time cash payment of $5.0 million and leased back such equipment from the Leasing Company.

The associated monthly lease rents will be paid over the term of three years.

However, we plan to 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 purchase the capital equipment, construct the new facilities and complete the aerogel capacity expansions required to support our evolving commercial opportunities and strategic business initiatives.

We also intend to enter into a new revolving credit facility.

Furthermore, we have certain assets that are currently owned, which we are evaluating for potential sale and lease back arrangements.

This type of arrangement would provide us with one-time cash payments in the near term, in exchange for future lease payments.

In November 2022, we entered into a loan agreement (the GM Loan Agreement) with General Motors Holdings LLC (GM), an entity affiliated with General Motors LLC, which provides for a multi-draw senior secured term loan (the GM Loan) in an aggregate principal amount of up to $100.0 million, available to the Company on a delayed draw basis beginning January 1, 2023 to September 30, 2023, subject to certain conditions precedent to funding.

In September 2023, we amended the GM Loan Agreement to (i) extend the draw period for the delayed GM Loan to a period beginning on the date that is twelve months prior to the date agreed upon by the Company and GM for the start of production at the Statesboro Plant and ending on March 31, 2024 (or any later date approved in writing by GM at its sole discretion);

(ii) extend the maturity date of the GM Loan from March 31, 2025 to September 30, 2025;

and (iii) add financial covenants measured starting from the fiscal quarter ending December 31, 2024 and at the end of each fiscal quarter thereafter.

We did not draw on the GM Loan.

On August 16, 2024, we and GM entered into a termination letter (the GM Termination Letter) to terminate and payoff in full all obligations outstanding under the GM Loan Agreement.

On August 19, 2024, we entered into the Credit Agreement with the Agent and the Lenders.

The 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 the Underwriting Agreement with 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 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 estimated 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, 2024 cash and cash equivalents balance of $220.9 million will be sufficient to support current operating requirements, current research and development activities and the initial capital expenditures required to support the evolving commercial opportunities in the EV market and other strategic business opportunities for at least the next twelve months.

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 purchase the capital equipment, construct the new facilities and complete the aerogel capacity expansions required to support our evolving commercial opportunities and strategic business initiatives.

We believe that consummation of equity financings could potentially result in an ownership change under Section 382 of the Internal Revenue Code.

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Primary Sources of Liquidity

Our principal sources of liquidity are currently our cash and cash equivalents.

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, 2023, we had $139.7 million of cash and cash equivalents.

In February 2022, we sold and issued to an affiliate of Koch $100.0 million in aggregate principal amount of our Convertible Senior PIK Toggle Notes.

In addition, in March 2022, pursuant to a securities purchase agreement dated February 15, 2022, we sold to an affiliate of Koch 1,791,986 shares of our common stock, at a price of $27.902 per share, for net proceeds of $49.9 million after deducting fees and offering expenses of $0.1 million.

On March 16, 2022, we entered into a sales agreement for an ATM offering program with Cowen and Company, LLC and Piper Sandler & Co., as our sales agents.

During the year ended December 31, 2022, we sold 5,241,400 shares of our common stock through the 2022 ATM offering program and received net proceeds of $72.7 million.

The 2022 ATM offering program was terminated on June 20, 2023.

On November 28, 2022, our wholly owned subsidiary, Aspen Aerogels Georgia, LLC, entered into a $100.0 million loan agreement with GM for which the proceeds to be used for the construction and operation of our planned aerogel manufacturing facility in Bulloch County, Georgia.

The agreement allows for borrowings beginning in on the date that is twelve (12) months prior to the date agreed upon by Borrower and GM for the start of production at the Plant and ending on March 31, 2024 (or any later date approved in writing by GM at its sole discretion).

On November 29, 2022, we completed an underwritten public offering of 29,052,631 shares of our common stock at a public offering price of $9.50 per share.

We received net proceeds of $267.5 million after deducting underwriting discounts and commissions of $8.1 million and offering expenses of approximately $0.5 million.

On December 19, 2023, we entered into a securities purchase agreement with certain institutional investors named therein, pursuant to which we issued and sold, in a registered direct offering directly to the Investors an aggregate of 6,060,607 shares of our common stock at an offering price of $12.38 per share.

We received net proceeds of $74.4 million, after deducting offering expenses of approximately $0.6 million.

See “ Risk Factors - Risks Related to Our Business and Strategy - We will require significant 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, 2022.

As of December 31, 2024, we had $220.9 million of cash and cash equivalents and $16.7 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, 2023.

Analysis of Cash Flow

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Operating Activities

During 2024, we provided $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.

During 2023, we used $42.6 million in net cash in operating activities, as compared to the use of $94.4 million in net cash during 2022, a decrease in the use of cash of $51.8 million.

This decrease in the use of cash was the result of the decrease in net loss adjusted for non-cash items of $44.8 million, and a decrease in cash used by changes in working capital of $7.0 million.

During 2022, we used $94.4 million in net cash in operating activities, as compared to the use of $18.6 million in net cash during 2021, an increase in the use of cash of $75.8 million.

This increase in the use of cash was the result of the increase in net loss adjusted for non-cash items of $31.6 million, and a decrease in cash provided by changes in working capital of $44.2 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 engineering designs for the planned aerogel manufacturing facility in Bulloch County, Georgia.

Net cash used in investing activities for 2024 and 2023 totaled $86.3 million and $175.5 million, respectively.

Financing Activities

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 revolver, net of issuance costs, $93.2 million in proceeds from the registered direct offering of common stock.

net of issuance costs, offset by $150.0 million in cash used for the repayment of the convertible note, $6.5 million in cash used for repayments from the term loan, $1.3 million in cash used for payments made for employee tax withholdings associated with the vesting of restricted stock units, and $0.9 million in repayments of a sales leaseback.

Net cash provided by financing activities in 2023 totaled $75.5 million and consisted of net proceeds from the registered direct offering of common stock of $74.2 million and $1.7 million in proceeds from employee stock option exercises, offset, in part, by $0.4 million in cash used for payments made for employee tax withholdings associated with the vesting of restricted stock units.

Net cash provided by financing activities in 2022 totaled $478.4 million and consisted of $267.5 million of net proceeds from our underwritten public offering, $99.8 million in net proceeds from the issuance of convertible debt, $72.7 million of net proceeds from our 2022 ATM offering program, net proceeds from the private placement of common stock of $49.9 million, and proceeds from employee stock option exercises of $0.6 million, offset, in part, by $9.7 million for payments of a prepayment liability and $2.4 million for payments for employee tax withholdings associated with the vesting of restricted stock units.

Capital Spending and Future Capital Requirements

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As of December 31, 2024, we had capital commitments of approximately $172.4 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 the planned aerogel manufacturing facility in Bulloch County, Georgia and consist primarily of costs for equipment and construction.

As indicated in the overview of the liquidity and capital resources section, in order to manage the development of the second plant so that its increased capacity comes online in a manner that aligns with our current expectations as to demand from our EV customers, we are extending the timeframe for construction and commissioning of the second plant until such time as its capacity is supported by increased demand.

In the meantime, and until we ramp up construction, we expect to be able to substantially reduce our planned capital expenditures for 2024.

These commitments relate to the enhancement of our existing production lines in our East Providence facility and our fabrication operation in Mexico, and the previously planned aerogel manufacturing facility in Statesboro, Georgia and consist primarily of costs for equipment and construction.

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 support Aspen’s Energy Industrial segment and are capable of delivering increased aerogel production capacity.

Accordingly, we have ceased construction at our previously planned second manufacturing plant in Statesboro, Georgia.

In the meantime, we expect to be able to substantially reduce our planned capital expenditures for 2025.

We intend to fund capital expenditures related to the expansion of capacity of our existing manufacturing facility with our existing cash balance and anticipated cash flows from operations.

We plan to fund the capital expenditures required to build a carbon aerogel battery materials facility, and to construct a new aerogel blanket manufacturing facility with additional equity financings, debt financings, equipment leasing, sale-leaseback transactions, customer prepayments, government grant and loan programs or credit facilities.

We plan to fund the capital expenditures required to build a carbon aerogel battery materials facility, with additional equity financings, debt financings, equipment leasing, sale-leaseback transactions, customer prepayments, government grant and loan programs or credit facilities.

Contractual Obligations and Commitments

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Monterrey, Mexico;

and Pawtucket, Rhode Island for research, administrative, fabrication, and warehousing purposes under leases expiring between January 31, 2024 and April 30, 2034.

and Pawtucket, Rhode Island for research, administrative, fabrication, and warehousing purposes under leases expiring between March 31, 2025 and April 30, 2034.

See “Item 2 — Properties.” We also lease vehicles and equipment under non-cancelable operating leases that expire at various dates.

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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 2026 through 2034.

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.

Revolving Credit Facility

On March 12, 2021, we entered into an Amended and Restated Loan and Security Agreement, or the SVB Loan Agreement, with Silicon Valley Bank, or SVB.

On November 28, 2022, we terminated the SVB Loan Agreement with Silicon Valley Bank.

As of the date of termination, we had no amounts due or owed to SVB under the SVB Loan Agreement for any principal, interest, or other amounts, other than approximately $1.2 million in letters of credit that were issued under the SVB Loan Agreement and were cash collateralized in connection with the termination of the SVB Loan Agreement.

MidCap Loan Facility

On August 19, 2024, we and Aspen RI entered into the Credit Agreement, by and among the Borrowers, the Agent, MidCap Financial Trust, as 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 have been used in connection with the transaction contemplated by the Note Repurchase Agreement, the payment of related fees and expenses and for working capital of the Company and its subsidiaries.

Loans borrowed under the MidCap Loan Facility mature on August 19, 2029.

The MidCap Loan Facility 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 (A) $100.0 million and (B) the value of the borrowing base (defined as the sum of (x) 85% of certain eligible accounts of the Borrowers and (y) the lesser of 85% of the NOLV or 85% of the cost of certain eligible inventory of the Borrowers).

Loans borrowed under the Revolving Facility will bear an interest rate equal to Term SOFR plus 4.60% per year, subject to a Term SOFR floor of 2.50%.

The Revolving Facility has a required minimum balance set at 30% of the average borrowing base during the immediate preceding month.

The Borrowers will have the right to prepay the loans outstanding under the MidCap Loan Facility (or, with respect to the Revolving Facility, terminate the commitments thereunder), subject to a premium equal to 3.0% of the amount prepaid or terminated, as applicable, during the first year after the closing date, which premium will be decreased to 2.0% during the second year after the closing date and to 1.0% thereafter.

Convertible Note - Related Party

On February 18, 2022, we sold and issued to an affiliate of Koch $100.0 million in aggregate principal amount of Notes.

The Notes bear interest at the rate of SOFR plus 5.50% per annum if interest is paid in cash, or, if interest is paid in kind (through an increase in the principal amount of the outstanding Notes or through the issuance of additional Notes), at SOFR plus 6.50% per annum.

Under the terms of the investment, SOFR has a floor of 1% and a cap of 3%.

We can elect to make any interest payment through Cash Interest, PIK Interest or any combination thereof.

Interest on the Notes is payable semi-annually in arrears on June 30 and December 30, commencing on June 30, 2022.

It is expected that the Notes will mature on February 18, 2027, subject to earlier conversion, redemption or repurchase.

The Notes are convertible at the option of the holder at any time until the business day prior to the maturity date, including in connection with a redemption by us.

On November 28, 2022, in connection with the Loan Agreement, we entered into an amendment to the Notes, or the Convertible Note Amendment, to reduce the initial Conversion Price (as defined in the Notes) by $5.00 per share from $34.936625 per share to $29.936625 per share, by increasing the initial Conversion Rate (as defined in the Notes) from 28.623257 shares per $1,000 of Capitalized Principal Amount (as defined in the Notes) to 33.400100 shares per $1,000 of Capitalized Principal Amount under the Notes, subject to customary anti-dilution and other adjustments (as described in the Indenture, which governs the Notes).

If the closing price per share of our common stock on the New York Stock Exchange is at least 130% of the Conversion Price for 20 consecutive trading days, we may elect to convert the principal and accrued interest owing under the Notes, plus a make-whole amount equal to the sum of the present values of the remaining interest payments that would have otherwise been payable from the date of such conversion, redemption or repurchase, as applicable, through maturity, or the Make-Whole Amount, into our common stock at the Conversion Price.

The Notes are redeemable by us at any time and from time to time in the event that the volume weighted average price of our common stock for the 10 trading days immediately preceding the date on which we provide the redemption notice has been at least 130% of the Conversion Price then in effect, at a redemption price of 100% of the principal amount of such Notes, plus accrued and unpaid interest to, but excluding the redemption date, plus the Make-Whole Amount.

On August 19, 2024, we entered into the Note Repurchase Agreement with Wood River, pursuant to which we repurchased from Wood River the Convertible Note), such aggregate amount being the entire outstanding amount of the Convertible Note, for a total purchase price of $150.0 million in cash, which amount equals to the Redemption Price (as defined in the Convertible Note).

Pursuant to the Note Repurchase Agreement, all rights and obligations, covenants and agreements under the Convertible Note and the underlying note purchase agreement were satisfied and discharged.

Purchase Commitments

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Standards Implemented Since December 31, 2024

The Company has not implemented any accounting standards that had a material impact on its consolidated financial statements during the year ended December 31, 2023.

Standards to be Implemented

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2023-07 Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures to enhance disclosures about significant segment expenses.

This ASU is effective for our fiscal year 2024 and interim periods in fiscal year 2025.

Early adoption is permitted.

We are currently evaluating segment expense disclosures related to its annual report for fiscal year 2024.

Standards to be Implemented

In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740) Improvements to Income Tax Disclosures 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.

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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

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We recorded warranty expense of $1.4 million during the year ended December 31, 2024.

We recorded warranty expense of $0.2 million during the year ended December 31, 2022.

We recorded warranty expense of less than $0.1 million during the year ended December 31, 2021.

We recorded warranty expense of $0.5 million and $0.2 million during the years ended December 31, 2023 and 2022, respectively.

As of December 31, 2024, we had satisfied all outstanding warranty claims.

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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.

For the restricted stock awards issued to our Chief Executive Officer during the year ended December 31, 2021 with vesting subject to achievement of certain volume weighted average common stock price targets over a three-to-five year period, we used a

Monte-Carlo simulation model to estimate the grant date fair value with respect to 461,616 shares of restricted common stock.

The award had an aggregate grant date fair value of $6.5 million.

On June 2, 2022, we issued 53,590 shares of restricted common stock, pursuant to a performance-based restricted stock agreement, to each of certain employees, with vesting in tranches, subject to achievement of certain time and performance vesting conditions, as defined, over a three-to-five year period.

We used a Monte-Carlo simulation model to estimate the grant date fair value of the awards.

The equity awards had a total aggregate fair value of $4.0 million at the time of grant.

QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK

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As of December 31, 2024, we had $0.4 million of restricted cash to support our outstanding letters of credit.

We terminated our revolving credit facility agreement on November 28, 2022.

As of December 31, 2024, we had $114.7 million of term loan outstanding and $42.1 million of revolver loan outstanding.

Loans borrowed under the Term Loan Facility will bear interest rate equal to Term SOFR (as defined in the Credit Agreement) for a one-month interest period plus 4.50% per year, subject to a Term SOFR floor of 4.50% and a Term SOFR cap of 7.50%.

Loans borrowed under the Revolving Facility will bear an interest rate equal to Term SOFR plus 4.60% per year, subject to a Term SOFR floor of 2.50%.

Therefore, fluctuations in interest rates will impact our consolidated financial statements.

A rising interest rate environment will increase the amount of interest paid on these loans.

A hypothetical 100 basis point increase or decrease in interest rates would not have a material effect on the results of our operations.

Inflation Risk

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We are subject to inherent risks attributed to operating in a global economy.

Virtually all of our revenue, receivables, purchases and debts are denominated in U.S.

The majority of our revenue, receivables, purchases and debts are denominated in U.S.

As we expand our presence in international markets, to the extent we are required to enter into agreements denominated in a currency other than the US dollar, our results of operations and cash flows may increasingly be subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign exchange rates.

During the fiscal year ended December 31, 2024, our largest exposures to foreign exchange rates consisted primarily of the Mexican Peso against the U.S.

For the fiscal years ended December 31, 2024 and 2022, we had foreign exchange losses of $2.8 million and $0.2 million.

For the fiscal year ended December 31, 2023, we had foreign exchange gains of $0.5 million.

FINANCIAL STATEMEN TS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

To the To the Stockholders and Board of Directors

Aspen Aerogels, Inc.:

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We have audited the accompanying consolidated balance sheets of Aspen Aerogels, Inc.

and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes and financial statement schedule II (collectively, the consolidated financial statements).

and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes and financial statement schedules II (collectively, the consolidated financial statements).

We also have audited the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

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A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the

maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) 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;

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) 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 (3) 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.

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Boston, Massachusetts

March 7, 2024

February 27, 2025

ASPEN AEROGELS, INC.

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Deferred revenue

Finance obligation for sale and leaseback transactions

Operating lease liabilities

Long term debt - current portion

Total current liabilities

Revolving line of credit

Long term debt

Convertible note - related party

Finance obligation for sale and leaseback transactions long-term

Operating lease liabilities long-term

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General and administrative

Impairment of equipment under development

Total operating expenses

Loss from operations

Income (loss) from operations

Other income (expense)

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Income from Employee Retention Credits

Gain on extinguishment of debt

Loss on extinguishment of debt

Total other income (expense)

Net loss per share:

Basic and diluted

Income (loss) before income tax expense

Income tax expense

Net income (loss)

Net income (loss) per share:

Weighted-average common shares outstanding:

Basic and diluted

See accompanying notes to consolidated financial statements.

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Proceeds from at-the-market offering, net of commissions and fees of $ 2,269 and issuance costs of $ 616

Forfeiture of performance-based restricted stock

Proceeds from private placement of common stock, net of fees and issuance costs of $ 137

Proceeds from underwritten public offering, net of underwriting discounts and commissions of $ 8,052 and issuance costs of $ 452

Increase in debt discount due to modification of convertible note – related party

Balance at December 31, 2022

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Proceeds from employee stock option exercises

Proceeds from at-the-market offering, net of commissions and fees of $ 2,269 and issuance costs of $ 616

Proceeds from private placement of common stock, net of fees and issuance costs of $ 137

Proceeds from underwritten public offering, net of underwriting discounts and commissions of $ 8,052 and issuance costs of $ 452

Increase in debt discount due to modification of convertible note – related party

Proceeds from registered direct offering of common stock, net of fees and issuance costs of $ 623

Issuance costs from underwritten public offering

Balance at December 31, 2023

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Proceeds from registered direct offering of common stock, net of fees and issuance costs of $ 686

Issuance costs from underwritten public offering

Cancellation of restricted stock

Employee restricted stock awards withheld for tax

Balance at December 31, 2024

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Cash flows from operating activities:

Net income (loss)

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

Gain on extinguishment of debt

Accretion of interest on convertible note - related party

Amortization of convertible note issuance costs

Amortization of debt discount due to modification of convertible note – related party

Amortization of debt issuance costs

Amortization of debt discount due to modification of convertible note – related party

Loss on extinguishment of debt

Deferred financing costs written off

Provision for bad debt

Stock compensation expense

Stock-based compensation expense

Impairment of property, plant and equipment

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

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Operating lease liabilities

Other liabilities

Net cash used in operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

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Cash flows from financing activities:

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

Issuance costs from underwritten public offering

Proceeds from underwritten public offering, net of underwriting discounts, commissions and issuance costs

Proceeds from issuance of convertible note related party

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Payments made for employee restricted stock tax withholdings

Proceeds from at-the-market offering net of commissions and fees of $ 2,269 and $ 601

Fees and issuance costs from at-the-market offering

Proceeds from at-the-market offering net of commissions, fees and issuance costs of $ 2,885

Proceeds from registered direct offering of common stock

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Fees and issuance costs from private placement of common stock

Repayment of convertible note

Repayment of term loan

Proceeds from term loan

Issuance costs from term loan and revolver

Proceeds from revolver

Proceeds from sale and leaseback transactions

Repayment of finance obligation for sale and leaseback transactions

Repayment of prepayment liability

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Aspen Aerogels, Inc.

(the Company) is an aerogel technology company that designs, develops and manufactures innovative, high-performance aerogel insulation used primarily in the energy industrial and sustainable insulation materials markets.

In addition, the Company has introduced a line of aerogel thermal barriers for use in battery packs in the electric vehicle ("EV") market.

The Company is also developing applications for its aerogel technology in the battery materials and a number of other high-potential markets.

(the Company) is an aerogel technology company that designs, develops and manufactures innovative, high-performance aerogel materials used primarily in the energy industrial, sustainable insulation materials and electric vehicle (EV) markets.

The Company has provided high-performance aerogel insulation to the energy industrial and sustainable insulation markets for nearly two decades.

The Company has developed and commercialized its proprietary line of PyroThin aerogel thermal barriers for use in battery packs in EVs.

In addition, the Company is developing applications for its aerogel technology in the battery materials market and a number of other high-potential markets.

The Company's core businesses is organized into two reportable segments:

Energy Industrial and Thermal Barrier.

The Company maintains its corporate offices in Northborough, Massachusetts.

The Company has three wholly owned subsidiaries:

Aspen Aerogels Rhode Island, LLC, Aspen Aerogels Germany, GmbH and Aspen Aerogels Georgia, LLC.

During the year ended December 31, 2023, the Company incurred a net loss of $ 45.8 million and used $ 42.6 million of cash in operations and $ 175.5 million of cash for capital expenditures.

On February 15, 2022, the Company entered into a note purchase agreement with an affiliate of Koch Disruptive Technologies, LLC (Koch), relating to the issuance and sale of $ 100.0 million of the Company’s convertible debt.

On November 29, 2022, the Company completed an underwritten public offering of 29,052,631 shares of our common stock at a public offering price of $ 9.50 per share.

The Company received net proceeds of $ 267.5 million after deducting underwriting discounts and commissions of $ 8.1 million and offering expenses of approximately $ 0.5 million.

On December 19, 2023, the Company entered into a securities purchase agreement with certain institutional investors named therein, pursuant to which the Company agreed to issue and sell, in a registered direct offering by the Company directly to the Investors an aggregate of 6,060,607 shares of the Company’s common stock, $ 0.00001 par value per share.

The shares were sold to the Investors at a price per share of $ 12.375 per share.

The net proceeds from the Offering, after deducting offering expenses, were approximately $ 74.4 million.

The Company has four wholly owned subsidiaries:

Aspen Aerogels Rhode Island, LLC ("Aspen RI"), Aspen Aerogels Germany, GmbH, Aspen Aerogels Georgia, LLC, and Aspen Aerogels Mexico Holdings, LLC ("Aspen Mexico").

Additionally, we engaged Prodensa Servicios de Consultora 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.

OPE is currently owned by Prodensa, which charges a management fee.

There is an option for OPE to be purchased by the Company after a period of 18 months.

As of December 31, 2024 , the Company has notified Prodensa of the intent to purchase OPE.

During the period between inception and the exercise of the purchase option, OPE operations are consolidated within the Company financial statements.

During the year ended December 31, 2024, the Company earned a net income of $ 13.4 million, generated $ 45.5 million of cash from operations and used $ 86.3 million of cash for capital expenditures.

The Company had unrestricted cash and cash equivalents of $ 220.9 million as of December 31, 2024.

On November 28, 2022, the Company entered into a loan agreement with General Motors Holdings LLC, an entity affiliated with General Motors LLC, which provides for a multi-draw senior secured term loan in an aggregate principal amount of up to $ 100.0 million, available to the Company on a delayed draw basis beginning January 1, 2023 to September 30, 2023 , subject to certain conditions precedent to funding.

On September 28, 2023, the Company amended the GM Loan Agreement to extend the draw period for the delayed GM Loan to a period beginning on the date that is twelve months prior to the date agreed upon by the Company and GM for the start of production at an aerogel manufacturing facility in Bulloch County, Georgia (the Plant) and ending on March 31, 2024 (or any later date approved in writing by GM at its sole discretion);

extend the maturity date of the GM Loan from March 31, 2025 to September 30, 2025;

and add financial covenants measured starting from the fiscal quarter ending December 31, 2024 and at the end of each fiscal quarter thereafter.

The Company is increasing investment in the research and development of next-generation aerogel products and manufacturing process technologies.

In addition, the Company has developed a number of promising aerogel products and technologies for the EV market.

In January 2024 and September 2024 , the Company entered into sale and leaseback arrangements, pursuant to which the Company 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 .

On August 19, 2024, the Company and Aspen RI (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) with MidCap Funding IV Trust, as agent (the Agent), MidCap Financial Trust, as term loan servicer, and the financial institutions or other entities from time to time party thereto as lenders (the Lenders), with respect to the MidCap Loan Facility, which 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 of the 2022 Convertible Notes (as defined below) for $ 150.0 million and for general corporate purposes.

The amount available to the Company at December 31, 2024 under the Revolving Facility was $ 16.7 million.

In October 2024, the Company entered into an underwriting agreement (the Underwriting Agreement) with Goldman Sachs & Co.

LLC and Morgan Stanley & Co.

LLC (collectively, the Underwriters), pursuant to which the Company issued and sold an aggregate of 4,887,500 shares of the Company’s common stock, which included 637,500 shares pursuant to the Underwriters’ option to purchase additional shares of common stock of the Company, to the Underwriters in a registered underwritten offering (the Offering).

The price to the public in the Offering was $ 20.00 per share.

The net proceeds to the Company from the Offering were approximately $ 93.2 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company.

In November 2022, the Company entered into a loan agreement (the GM Loan Agreement) with General Motors Holdings LLC (GM), an entity affiliated with General Motors LLC, which provides for a multi-draw senior secured term loan (the GM Loan) in an aggregate principal amount of up to $ 100.0 million, available to the Company on a delayed draw basis beginning January 1, 2023 to September 30, 2023 , subject to certain conditions precedent to funding.

In September 2023, the Company amended the GM Loan

Agreement to (i) extend the draw period for the GM Loan to a period beginning on the date that is twelve months prior to the date agreed upon by the Company and GM for the start of production at an aerogel manufacturing facility in Statesboro, Georgia (the Plant) and ending on March 31, 2024 (or any later date approved in writing by GM at its sole discretion);

(ii) extend the maturity date of the GM Loan from March 31, 2025 to September 30, 2025;

and (iii) add financial covenants measured starting from the fiscal quarter ending December 31, 2024 and at the end of each fiscal quarter thereafter.

The Company has not drawn, and no longer has the ability to draw on the GM Loan.

The associated unamortized deferred financing costs of $ 1.7 million were written off to interest expense upon the expiration of the draw period.

On August 16, 2024, the Company and GM entered into the GM Termination Letter to terminate and payoff in full all obligations outstanding under the GM Loan Agreement.

The Company has developed a number of promising aerogel products and technologies for the EV market.

The Company will continue to invest in research and development of next-generation aerogel products and manufacturing process technologies.

The Company believes that the commercial potential for the Company’s products and technology in the EV market is significant.

Accordingly, the Company is hiring additional personnel, incurring additional operating expenses, and incurring significant capital expenditures to expand silica aerogel manufacturing capacity, build an automated thermal barrier fabrication operation, enhance research and development laboratory facilities and equipment, and construct a battery materials facility, among other efforts.

The Company expects its existing cash balance will be sufficient to support current operating requirements, current research and development activities and the capital expenditures required to support the evolving commercial opportunity in the EV market and other strategic business initiatives.

However, the Company plans to supplement its cash balance 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 purchase the capital equipment, construct the new facilities, establish the operations and complete the aerogel capacity expansions required to support these evolving commercial opportunities and strategic business initiatives.

However, the Company may supplement its cash balance 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 purchase the capital equipment, construct the new facilities, establish the operations and complete the aerogel capacity expansions required to support these evolving commercial opportunities and strategic business initiatives.

(2) Summary of Basis of Presentation and Significant Accounting Policies

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Upon consolidation, the Company recognizes the assets acquired, the liabilities assumed, and any third-party ownership of membership interests as non-controlling interest as of the consolidation or acquisition date, measured at their relative fair values.

In April 2022, the Company engaged Prodensa Servicios de Consultora to establish OPE Manufacturer Mexico S de RL de CV, a maquiladora located in Mexico with the express purposes of manufacturing thermal barrier PyroThin products and ultimately operating an automated fabrication facility for PyroThin.

OPE is currently owned by Prodensa, which charges a management fee though there is an option for OPE to be purchased by Aspen after a period of 18 months .

During the period between inception and the exercise of the purchase option, OPE operations are consolidated within the Company financial statements as of and for the year ended December 31, 2023 .

Use of Estimates

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All cash and cash equivalents are maintained with major financial institutions in North America.

Deposits with this financial institution may exceed the amount of insurance provided on such deposits;

Deposits with these financial institutions may exceed the amount of insurance provided on such deposits;

however, these deposits typically may be redeemed upon demand and, therefore, bear minimal risk.

7 unchanged sentences

The Company reviews the allowance for doubtful accounts quarterly.

During the year ended December 31, 2024, the Company recorded a charge for estimated customer uncollectible accounts receivable of $ 0.2 million.

During the year ended December 31, 2023, the Company recorded a charge for estimated customer uncollectible accounts receivable of less than $ 0.1 million.

During the year ended December 31, 2022, the Company recorded a charge for estimated customer uncollectible accounts receivable of $ 0.1 million.

During the year ended December 31, 2021, the Company did not record any charges for uncollectible accounts receivable.

Allowance for doubtful accounts was $ 0.6 million and $ 0.2 million at December 31, 2024 and 2023, respectively.

2 unchanged sentences

For the year ended December 31, 2023 , two customers represented 41 % and 14 % of total revenue, respectively.

For the year ended December 31, 2021 , one customer represented 28 % of total revenue.

For the year ended December 31, 2022 , two customers represented 25 % and 22 % of total revenue, respectively.

At December 31, 2024 , the Company had two customers which accounted for 80 % and 5 % of accounts receivable, respectively.

33 unchanged sentences

For an initial shipment of product for use in a system with new technical demands or new configurations and where the Company is unsure of meeting the customer’s specifications, the Company will defer the recognition of product revenue and related costs until written customer acceptance is obtained.

The Company recorded warranty expense of $ 0.5 million during the year ended December 31, 2023 .

The Company recorded warranty expense of $ 0.2 million during the year ended December 31, 2022 .

The Company recorded warranty expense of less than $ 0.1 million during the year ended December 31, 2021 .

Shipping and Handling Costs

10 unchanged sentences

All shares of restricted stock are not transferable until vested.

Restricted stock is typically issued to non-employee directors and typically vests over a one-year period from the date of issuance.

Restricted stock or RSUs are typically issued to non-employee directors and typically vests over a one-year period from the date of issuance.

RSUs are issued to employees and typically vest over a three-year period from the date of issuance.

2 unchanged sentences

For stock awards that contain a market condition, the Company uses the Monte-Carlo simulation model to determine the fair value of the awards.

In addition to the input assumptions used in the Black-Scholes model, the Monte-Carlo simulation model factors

the probability that the specific market condition may or may not be satisfied into the valuation.

In addition to the input assumptions used in the Black-Scholes model, the Monte-Carlo simulation model factors the probability that the specific market condition may or may not be satisfied into the valuation.

Stock-based compensation expense for awards with a market condition is recognized on a straight-line basis over the requisite service period for each such award.

2 unchanged sentences

Earnings per Share

The Company calculates net loss per common share based on the weighted-average number of common shares outstanding during each period.

The Company calculates net income (loss) per common share based on the weighted-average number of common shares outstanding during each period.

Potential common stock equivalents are determined using the treasury stock method.

12 unchanged sentences

The Company’s chief operating decision maker is the Chief Executive Officer.

The Company’s chief operating decision maker reviews consolidated operating results to make decisions about allocating resources and assessing performance for the entire Company.

The Company’s chief operating decision

maker reviews consolidated operating results to make decisions about allocating resources and assessing performance for the entire Company.

The Company presently views its operations and manages its business as two operating segments.

15 unchanged sentences

Leases for additional information.

Sale and Leaseback Accounting

The Company has entered into sale and leaseback transactions for certain equipment within its plants.

Due to the Company not meeting criteria to account for the transfer of the assets as a sale, sale accounting is precluded.

Accordingly, the Company uses the financing method to account for these transactions.

Under the financing method of accounting for a sale and leaseback, the Company does not derecognize the assets and does not recognize as revenue any of the sale proceeds received from the lessor that contractually constitutes payment to acquire the assets subject to these arrangements.

Instead, the sale proceeds received are accounted for as finance obligations and leaseback payments made by the Company are allocated between interest expense and a reduction to the finance obligation.

Interest on the finance obligation is calculated using the Company’s incremental borrowing rate at the inception of the arrangement on the outstanding finance obligation.

Foreign Currency Transactions

2 unchanged sentences

Gains and losses arising from foreign currency transactions and the effects of remeasuring monetary assets and liabilities are recorded in general and administrative expenses, net in the Consolidated Statements of Operations.

The Company had foreign exchange losses of $ 2.8 million and $ 0.2 million for the fiscal years ended December 31, 2024 and 2022, respectively.

For the fiscal year ended December 31, 2023, the Company had foreign exchange gains of $ 0.5 million.

Employee Retention Credits

9 unchanged sentences

Standards Implemented Since December 31, 2023

The Company has not implemented any accounting standards that had a material impact on its consolidated financial statements during the year ended December 31, 2023.

Standards to be Implemented After December 31, 2023

This ASU is effective for the Company’s fiscal year 2024 and interim periods in fiscal year 2025.

Early adoption is permitted.

The Company is currently evaluating segment expense disclosures related to its annual report for fiscal year 2024.

Standards to be Implemented After December 31, 2024

14 unchanged sentences

The Company applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.

At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation.

7 unchanged sentences

The Company records deferred revenue for product sales when (i) the Company has delivered products, but other revenue recognition criteria have not been satisfied, or (ii) payments have been received in advance of the completion of required performance obligations.

Thermal Barriers

The Company supplies fabricated, multi-part thermal barriers for use in battery packs in the EV market.

These thermal barriers are customized to meet customer specifications.

Although thermal barrier products are customized with no alternative use to the Company, the Company does not always have an enforceable right to payment.

Under the provisions of ASC 606, the Company recognizes revenue at a point in time when transfer of the control of the products is passed to the customer according to the terms of

the contract, including under bill and hold arrangements.

The timing of revenue recognition is assessed on a contract-by-contract basis.

Energy Industrial

13 unchanged sentences

Sales return reserves were approximately $ 0.3 million and $ 0.2 million at December 31, 2024 and December 31, 2023, respectively.

Thermal Barriers

The Company supplies fabricated, multi-part thermal barriers for use in battery packs in the EV market.

These thermal barriers are customized to meet customer specifications.

Although thermal barrier products are customized with no alternative use to the Company, the Company does not always have an enforceable right to payment.

Under the provisions of ASC 606, the Company recognizes revenue at a point in time when transfer of the control of the products is passed to the customer according to the terms of the contract, including under bill and hold arrangements.

The timing of revenue recognition is assessed on a contract-by-contract basis.

Shipping and Handling Costs

34 unchanged sentences

Contract Balances

The following table presents changes in the Company’s contract assets and contract liabilities during the year ended December 31, 2023:

The following table presents changes in the Company’s contract liabilities during the year ended December 31, 2024:

(In thousands)

Contract assets

Thermal barrier

Total contract assets

Contract liabilities

3 unchanged sentences

During the year ended December 31, 2024, the Company recognized $ 2.3 million of revenue that was included in deferred revenue at December 31, 2023.

A contract asset is recorded when the Company satisfies a performance obligation by transferring a promised good or service and has earned the right to consideration from its customer.

These assets may represent a conditional right to consideration and are included within accounts receivable on the consolidated balance sheets.

A contract liability is recorded when consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services under the terms of the contract.

17 unchanged sentences

Construction in progress totaled $ 352.6 million and $ 314.7 million at December 31, 2024 and 2023, respectively.

The balance at December 31, 2023 and 2022 included engineering designs and construction costs totaling $ 279.7 million and $ 164.5 million, respectively, for a planned aerogel manufacturing facility in Bulloch County, Georgia.

The Company incurred $ 6.1 million and $ 2.7 million in capitalized interest for the years ended December 31, 2023 and December 31, 2022, respectively, for the construction in progress in Bulloch County, Georgia.

The balance at December 31, 2024 and 2023 included engineering designs and construction costs totaling $ 323.6 million and $ 279.7 million, respectively, for a planned aerogel manufacturing facility in Statesboro, Georgia.

The Company incurred $ 0.0 million and $ 6.1 million in capitalized interest for the years ended December 31, 2024 and December 31, 2023, respectively, for the construction in progress in Statesboro, Georgia.

The Company recorded impairment charges of approximately $ 7.6 million during the year ended December 31, 2024, for equipment that will no longer be needed in manufacturing following customer directed engineering changes to a part it manufactures and for other property, plant and equipment that have become obsolete following development of new and more efficient equipment.

The impairment charges of $ 7.6 million during the year ended December 31, 2024 consist of $ 4.1 million impairment included in cost of revenue and $ 3.5 million included in impairment of equipment under development on the Company's consolidated statement of operations.

The Company received reimbursement for the losses incurred in connection with the customer-directed engineering changes which was recorded as an offset to the impairment loss recognized in cost of revenue.

There were no impairments of property, plant and equipment during the year ended December 31, 2023.

(6) Accrued Expenses

3 unchanged sentences

Other accrued expenses

(7) Revolving Line of Credit

The Company was party to the Second Amended and Restated Loan and Security Agreement with Silicon Valley Bank (Loan Agreement).

On March 12, 2021, the Loan Agreement was amended and restated to extend the maturity date of the revolving credit facility to April 28, 2022 and to establish financial covenants on certain minimum Adjusted EBITDA levels and minimum Adjusted Quick Ratio covenants, each as defined in the Loan Agreement.

At various dates in 2021, and subsequently on March 31, 2022, April 28, 2022, June 23, 2022, August 26, 2022 and October 14, 2022, the Company entered into amendments to the Loan Agreement to revise certain financial covenants, among other things.

On November 28, 2022, the Company terminated the Loan Agreement with Silicon Valley Bank.

As of both December 31, 2022 and 2023 , the Company had no amounts drawn from the revolving credit facility.

(8) Related Party Transactions

Convertible Note

During the year ended December 31, 2022, the Company issued a $ 100.0 million aggregate principal amount convertible note to Wood River Capital, LLC, an entity affiliated with Koch Strategic Platforms, LLC (the 2022 Convertible Note).

Refer to note 9 for more information.

Common Stock Sales

On June 29, 2021, the Company sold 3,462,124 shares of common stock to Spring Creek Capital, LLC, an entity affiliated with Koch Strategic Platforms, LLC, in a private placement of our common stock and received net proceeds of $ 73.5 million after deducting fees and offering expenses of $ 1.5 million.

On March 28, 2022, the Company sold 1,791,986 shares of common stock to Wood River Capital, LLC, an entity affiliated with Koch Strategic Platforms, LLC, at a purchase price equal to $ 27.902 per share, for aggregate gross proceeds of approximately $ 50.0 million.

On November 28, 2022, the Company sold 10,526,316 shares of common stock to Wood River Capital, LLC, an entity affiliated with Koch Strategic Platforms, LLC, at a purchase price equal to $ 9.50 per share, for aggregate gross proceeds of approximately $ 100.0 million, in an underwritten offering of common stock.

During the year ended December 31, 2023, the Company recorded costs of $ 8.6 million as a component of construction in process in connection with the planned aerogel manufacturing facility in Bulloch County, Georgia in fees from an entity affiliated with

Koch Disruptive Technologies, LLC for project management service.

The Company had $ 2.8 million in accounts payable as of December 31, 2023 due to the entity affiliated with Koch Disruptive Technologies, LLC.

During the year ended December 31, 2022, the Company recorded costs of $ 8.9 million as a component of construction in progress in connection with the planned aerogel manufacturing facility in Bulloch County, Georgia in fees from an entity affiliated with Koch Strategic Platforms, LLC for project management services.

During the year ended December 31, 2022, the Company sold 135,870 shares of its common stock to Robert M.

Gervis, a director of the Company at the time, in the Company’s at-the-market offering pursuant to a sales agreement, dated March 16, 2022, by and among the Company and Cowen and Company, LLC and Piper Sandler & Co.

(the Sales Agreement), for net proceeds of $ 4.4 million.

On August 19, 2024, the Borrowers entered into the Credit Agreement, by and among the Borrowers, the Agent, the Lenders and the other parties party thereto as additional guarantors and/or borrowers from time to time.

Loans borrowed under the MidCap Loan Facility mature on August 19, 2029.

The MidCap Loan Facility is comprised of (i) the Term Loan Facility in an aggregate principal amount of $ 125 million and (ii) the Revolving Facility in an aggregate principal amount not to exceed the lesser of (A) $ 100 million and (B) the value of the borrowing base (defined as the sum of (x) 85 % of certain eligible accounts of the Borrowers and (y) the lesser of 85 % of the NOLV or 85 % of the cost of certain eligible inventory of the Borrowers).

Loans borrowed under the Term Loan Facility will bear interest rate equal to Term SOFR (as defined in the Credit Agreement) for a one-month interest period plus 4.50 % per year, subject to a Term SOFR floor of 4.50 % and a Term SOFR cap of 7.50 %.

The Borrowers are required to pay the Lenders an exit fee of $ 2.5 million on the maturity date.

Additionally, the Borrowers are required to pay an origination fee of $ 1.3 million annually on the anniversary of the closing date.

Loans borrowed under the Revolving Facility will bear an interest rate equal to Term SOFR plus 4.60 % per year, subject to a Term SOFR floor of 2.50 %.

The Revolving Facility has a required minimum balance set at 30 % of the average borrowing base during the immediate preceding month.

The Borrowers are required to pay the Lenders under the Revolving Facility an unused line fee of 0.30 % of the average unused availability under the Revolving Facility, subject to the aforementioned minimum balance.

The MidCap Loan Facility is guaranteed by Aspen Mexico 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 Aerogels Georgia owned by the Company, in each case, subject to customary exceptions.

The Credit Agreement 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.

The Credit Agreement includes financial covenants for the benefit of the Lenders, including (i) a covenant to maintain Liquidity (as defined therein) equal to or greater than $ 75.0 million at all times and (ii) a covenant to maintain EBITDA (as defined therein) equal to or greater than the specified applicable amount set forth in the Credit Agreement, tested quarterly with the first test set at $ 45.0 million commencing with the fiscal quarter ended September 30, 2024.

The Borrowers will have the right to prepay the loans outstanding under the MidCap Loan Facility (or, with respect to the Revolving Facility, terminate the commitments thereunder), subject to a premium equal to 3.0 % of the amount prepaid or terminated, as applicable, during the first year after the closing date, which premium will be decreased to 2.0 % during the second year after the closing date and to 1.0 % thereafter.

The Borrowers will be required to mandatorily prepay the loans outstanding under the Term Loan Facility with, among other things, certain casualty insurance proceeds or proceeds from non-ordinary course assets sales (which will also be subject to the aforementioned premium).

The Borrowers will be required to mandatorily prepay the balance outstanding under the Revolving Facility (i) if the outstandings exceed the borrowing base in an aggregate amount equal to that excess or (ii) upon a cash dominion event of all the funds deposited in the lockbox account during the cash dominion period.

A cash dominion event is triggered (x) upon the occurrence of any Specified Event of Default (as defined in the Credit Agreement to include payment default, failure to deliver monthly or annual financials, financial covenant breach or bankruptcy) or any event of default arising from the failure to comply with the requirement to deliver a monthly borrowing base certificate, in each case, after any applicable grace period set forth in the Credit Agreement and/or cure rights applicable thereto or (y) if the Liquidity is less than $ 100 million.

MidCap debt consists of the following:

(In thousands)

Term loan issuance costs

Current portion

Long term portion

The Revolving Facility had an outstanding balance of $ 42.1 million as of December 31, 2024, net of unamortized issuance costs.

The amount available to the Company at December 31, 2024 under the Revolving Facility was $ 16.7 million.

(8) Convertible Note - Related Party

2022 Convertible Note

On February 15, 2022 , the Company entered into a note purchase agreement (the Note Purchase Agreement) with Wood River Capital LLC, an entity affiliated with Koch Strategic Platforms, LLC (Koch), relating to the issuance and sale to Koch of the 2022 Convertible Note in the aggregate principal amount of $ 100.0 million.

The transactions contemplated by the Note Purchase Agreement closed on February 18, 2022 (the Issue Date).

On February 15, 2022, the Company entered into a note purchase agreement (the Note Purchase Agreement) with Wood River Capital LLC (Wood River), an entity affiliated with Koch Strategic Platforms, LLC (Koch), relating to the issuance and sale to Wood River of convertible note (the 2022 Convertible Note) in the aggregate principal amount of $ 100.0 million.

The transactions contemplated by the Note Purchase Agreement closed on February 18, 2022.

The maturity date of the 2022 Convertible Note is February 18, 2027 , subject to earlier conversion, redemption, or repurchase.

The 2022 Convertible Note is a senior unsecured obligation of the Company and ranks equal in right of payment to all senior unsecured indebtedness of the Company and will rank senior in right of payment to any indebtedness that is contractually subordinated to the 2022 Convertible Note.

On August 19, 2024, the Company entered into a note purchase and sale agreement with Wood River (the Note Repurchase Agreement), pursuant to which the Company 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.

In accordance with ASU 2020-06, the 2022 Convertible Note is accounted for as a single unit of account and consists of the following:

(In thousands)

Convertible note, principal

Payment in-kind

Discount on convertible note

Discount on convertible note, net of accumulated amortization

Debt issuance costs, net of accumulated amortization

3 unchanged sentences

Fair values determined by Level 3 inputs utilize unobservable data points in which there is little or no market data, which require the Company to develop its own assumptions for the asset or liability.

The 2022 Convertible Note does not have current observable inputs such as recent trading prices (Level 3) and is measured at fair value using a combination of option pricing and discounted cash flow models and incorporate management’s assumptions for stock price, volatility and risk rate.

The Company estimated the fair value of the 2022 Convertible Note is approximately $ 118.2 million as of December 31, 2023 .

However, as the Company has not elected to utilize the fair value option, it is carried at amortized cost of $ 115.0 million.

Contractual Interest Rates

The 2022 Convertible Note was issued at par and bears interest at the Secured Overnight Financing Rate (SOFR) plus 5.50 % per annum if interest is paid in cash, or, if interest is paid in-kind as an increase in the principal amount of the outstanding note, at the SOFR plus 6.50 % per annum.

Under the terms of the 2022 Convertible Note, SOFR has a floor of 1 % and a cap of 3 %.

Interest on the 2022 Convertible Note is payable semi-annually in arrears on June 30 and December 30.

The Company, at its option, is permitted to settle each semi-annual interest payment in cash, in-kind, or any combination thereof.

It is expected that the Notes will mature on February 18, 2027 , subject to earlier conversion, redemption or repurchase.

The Company elected to repay the contractual interest due on June 30, 2022, December 30, 2022, June 30, 2023, and December 30, 2023 in-kind as an increase to the principal amount of $ 2.9 million, $ 4.9 million, $ 5.1 million, and $ 5.4 million respectively.

The contractual interest attributable to the 2022 Convertible Note was recorded as an addition to the convertible note – related party balance on the condensed consolidated balance sheets.

During the year ended December 31, 2023, the Company incurred $ 10.5 million of interest from the 2022 Convertible Note, of which $ 6.1 million was capitalized as part of the construction in progress for the planned manufacturing facility in Bulloch County, Georgia.

The Company paused the capitalization of interest related to the manufacturing facility being constructed in Bulloch County, Georgia during the year ended December 31, 2023 , as a result of the intentional slow down in construction.

During the year ended December 31, 2022, the Company incurred $ 7.8 million of interest from the 2022 Convertible Note, of which $ 2.7 million was capitalized as part of the construction in progress for the planned manufacturing facility in Bulloch County, Georgia.

Debt issuance costs comprised less than $ 0.2 million for the year ended December 31, 2023.

The effective interest rate approximated the contract interest rate for the year ended December 31, 2023.

Conversion Rights

On November 28, 2022, the Company entered into an amendment to the Convertible Note with Wood River Capital, LLC to reduce the initial Conversion Price by $ 5.00 per share from $ 34.936625 per share to $ 29.936625 per share, by increasing the initial Conversion Rate from 28.623257 shares per $ 1,000 of Capitalized Principal Amount to 33.400100 shares per $ 1,000 of Capitalized Principal Amount under the Convertible Note.

Accordingly, the 2022 Convertible Note is convertible at the option of the holder at any time prior to the business day immediately preceding the maturity date at an initial conversion rate of 33.400100 shares of the Company’s common stock per $ 1,000 of capitalized principal.

The effective conversion price is approximately $ 29.936625 per share (the Conversion Price).

The Conversion Price is subject to adjustment upon the occurrence of certain dilutive events such as stock splits and combinations, stock dividends, mergers and spin-off.

As of December 31, 2023, 3,951,833 shares of the Company’s common stock were issuable upon conversion of the 2022 Convertible Note.

The Company has the right to settle conversions in shares of common stock, cash, or any combination thereof.

If the closing price per share of the Company’s common stock on the New York Stock Exchange is at least 130 % of the Conversion Price for 20 consecutive trading days , the Company may elect to convert the principal and accrued interest owing under the Notes, plus a make-whole amount equal to the sum of the present values of the remaining interest payments that would have otherwise been payable from the date of such conversion, redemption or repurchase, as applicable, through maturity (the Make-Whole Amount), into the Company’s common stock at the Conversion Price.

Optional Redemption

The 2022 Convertible Note is redeemable at the Company’s option at any time and in the event that the volume weighted average price of the Company’s common stock for the 10 trading days immediately preceding the date on which the Company provides the redemption notice has been at least 130 % of the Conversion Price then in effect at a redemption price of 100 % of the principal amount, plus accrued and unpaid interest (excluding the redemption date), plus the Make-Whole Amount.

Contingent Redemption

Upon the occurrence of certain fundamental changes described in the Indenture (each, a Fundamental Change), the Holder of the Note may require that the Company repurchase all or part of the principal amount of the Note at a purchase price of 100 % of the principal amount of such Note, plus accrued and unpaid interest to, but excluding, the Fundamental Change repurchase date, plus the Make-Whole Amount.

The Indenture includes customary “events of default,” which may result in the acceleration of the maturity of the Note.

Embedded Derivatives

The Company determined that the Make-Whole feature of the 2022 Convertible Note requires bifurcation in accordance with Accounting Standards Codification 815, Derivatives and Hedging (ASC 815).

Accordingly, the Company must separately account for the feature at fair value with changes in fair value reported in current period earnings.

The fair value of the Make-Whole was determined to be immaterial as of February 18, 2022, December 31, 2022, and December 31, 2023 .

The 2022 Convertible Note did not have current observable inputs such as recent trading prices (Level 3) and was measured at fair value using a combination of option pricing and discounted cash flow models and incorporate management’s assumptions for stock price, volatility and risk rate.

The Company estimated the fair value of the 2022 Convertible Note was approximately $ 118.2 million as of December 31, 2023.

However, as the Company has not elected to utilize the fair value option, it was carried at amortized cost of $ 115.0 million.

(9) Related Party Transactions

Convertible Note

During the year ended December 31, 2022, the Company issued the 2022 Convertible Note to Wood River, an entity affiliated with Koch Strategic Platforms, LLC.

The Company repurchased the 2022 Convertible Note on August 19, 2024.

See Note (8) Convertible Note – Related Party for additional detail.

For the years ended December 31, 2024, 2023, and 2022 interest expense on the related party convertible note was $ 7.5 million, $ 5.3 million, and $ 5.1 million, respectively.

Common Stock Sales

On March 28, 2022, the Company sold 1,791,986 shares of common stock to Wood River at a purchase price equal to $ 27.902 per share, for aggregate gross proceeds of approximately $ 50.0 million.

On November 28, 2022, the Company sold 10,526,316 shares of common stock to Wood River at a purchase price equal to $ 9.50 per share, for aggregate gross proceeds of approximately $ 100.0 million, in an underwritten offering of common stock.

During the year ended December 31, 2022, the Company recorded costs of $ 8.9 million as a component of construction in progress in connection with the planned aerogel manufacturing facility in Statesboro, Georgia in fees from an entity affiliated with Koch Strategic Platforms, LLC for project management services.

During the year ended December 31, 2022, the Company sold 135,870 shares of its common stock to Robert M.

(the Sales Agreement), for net proceeds of $ 4.4 million.

(10) Other Income (Expense)

For the years ended December 31, 2023, and 2022 , interest expense on the related party convertible note was $ 5.3 million and $ 5.1 million, respectively and interest income, net, of $ 6.5 million and $ 1.6 million, respectively, are primarily related to interest earned on unrestricted cash and cash equivalents.

For the year ended December 2021, interest expense, net was $ 3.5 million, and consisted primarily of fees and interest expense related to the Company’s revolving credit facility with Silicon Valley Bank.

Interest income (expense), net

For the years ended December 31, 2024, 2023, and 2022 interest income (expense), net, included interest income of $ 5.7 million, $ 8.7 million, and $ 1.7 million, respectively, primarily related to interest earned on unrestricted cash and cash equivalents.

For the year ended December 31, 2024, interest income (expense), net included MidCap related interest on the term loan and revolver.

Employee Retention Credits

4 unchanged sentences

The Company qualified for the tax credit under the CARES Act for qualified wages for the years ended December 31, 2020 and 2021.

In September 2023, the Company submitted filings for CARES Employee Retention Credits totaling $ 2.2 million that are reported in the accompanying condensed consolidated balance sheet within prepaid expenses and other current assets as of December 31, 2023, and in the accompanying statement of operations for the year ended December 31, 2023.

In September 2023, the Company submitted filings for CARES Employee Retention Credits totaling $ 2.2 million that are reported in the accompanying condensed consolidated balance sheet within prepaid expenses and other current assets as of December 31, 2023 and 2024, and in the accompanying statement of operations for the year ended December 31, 2023.

(11) Leases & sale and leaseback

The Company leases office, laboratory, warehouse and fabrication space in Massachusetts, Rhode Island and Monterrey, Mexico under operating leases.

8 unchanged sentences

Under the terms of the lease extension, the landlord provided the Company with an allowance of $ 1.2 million to be utilized for improvements to the leased premises.

These amounts were considered a lease incentive and were excluded from the Company’s ROU assets upon its adoption of ASU 2016-02 on January 1, 2019 (see note 11).

These amounts were considered a lease incentive and were excluded from the Company’s ROU assets upon its adoption of ASU 2016-02 on January 1, 2019.

At December 31, 2024 and 2023 , the Company had capitalized $ 1.2 million in associated leasehold improvement costs.

9 unchanged sentences

As of December 31, 2024 , the Company had no additional operating real estate or equipment leases that would commence during 2025.

Sale and leaseback transaction

In January and September 2024 , the Company entered into sale and leaseback arrangements, pursuant to which the Company sold certain equipment to an equipment leasing company for one-time cash payments of $ 5.0 million and $ 10.0 million, respectively, leased back such equipment from the leasing company.

The transactions were considered as failed sale and leaseback transactions and accordingly, were accounted as financing transactions.

The Company did not recognize gain on any of the proceeds received from the lessor that contractually constitute payments to acquire the assets subject to these arrangements.

Instead, the sale proceeds received were accounted for as finance obligations.

The monthly lease rents will be paid over the term of three years and will be allocated between interest expense and principal repayment of the financial liability.

The outstanding finance obligation balance as of December 31, 2024 was $ 14.1 million.

Maturities of finance obligations for sale and leaseback at December 31, 2024 are as follows:

Finance Obligation

(In thousands)

Total lease payments

Less imputed interest

Total lease liabilities

(12) Commitments and Contingencies

Cloud Computing Agreement

The Company is party to a cloud computing agreement that is a service contract for enterprise resource planning software.

The agreement has a three-year term beginning on January 15, 2021, with option to renew.

During the year ended December 31, 2023, the Company capitalized $ 1.3 million of costs related to implementation of the software that began to amortize during 2022 with a five year expected life.

The Company is party to multiple cloud computing agreements that are service contracts for enterprise resource planning software and payroll services.

The amortization period of a cloud computing agreement was adjusted during the year ended December 31, 2024 to align with implementation of a new agreement that will begin to amortize during 2025.

The amortization associated with the payroll services agreement began during the year ended December 31, 2024 and will amortize over a period of five years .

The capitalized implementation costs are classified on the consolidated balance sheets as follows:

10 unchanged sentences

All other terms of the Contracts are generally consistent with the OEM’s standard purchase terms, including quality and warranty provisions that are customary in the automotive industry.

Charges for Engineering Change

In January 2024, the Company was notified by a customer of an engineering change to one of the parts the Company manufactures for that customer to enable incremental productivity and support a set of broader system level changes that could drive higher demand for its parts.

The Company submitted claims to the customer for reimbursement for estimated inventory and equipment losses incurred by the Company and its vendors due to potential obsolescence.

In connection with the same, during the three months ended March 31, 2024, the Company recognized a charge of $ 6.8 million, net of contractual recoverable of $ 1.9 million, in cost of revenues for inventory obsolescence and impairment of equipment.

The claims were fully approved and recovered by December 31, 2024, and the reimbursements were recognized as an offset to the charge the Company recognized in cost of revenues.

Letters of Credit

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As of December 31, 2024, the Company had $ 0.4 million of restricted cash to support our outstanding letters of credit.

The Company had letters of credit outstanding of $ 1.2 million at December 31, 2022 .

These letters of credit were secured by the Company’s revolving credit facility (see note 7).

On November 28, 2022 , we terminated the Loan Agreement with Silicon Valley Bank.

The Company had letters of credit outstanding of $ 0.2 million at December 31, 2023 and these letters of credit were secured by the Company’s restricted cash.

The Company is, from time to time, a party to litigation that arises in the normal course of its business operations.

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Purchase obligations are entered into with various vendors in the normal course of business and are consistent with the Company's expected requirements.

The Company offers warranties to its customers depending upon the specific product.

The Company’s standard warranty period for energy industrial products extends to one year from the date of shipment.

This standard warranty provides that the Company’s products will be free from defects in material and workmanship, and will, under normal use, conform to the specifications for the product.

The Company’s thermal barrier products provide quality and warranty provisions customary in the automotive industry.

The Company recorded warranty expense of $ 1.4 million during the year ended December 31, 2024 .

The Company recorded warranty expense of $ 0.5 million during the year ended December 31, 2023 .

The Company recorded warranty expense of $ 0.2 million during the year ended December 31, 2022 .

(13) Stockholders’ Equity

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Equity awards granted to employees generally vest over a service period of three to four years .

Restricted stock and stock options granted to nonemployee directors generally vest over a one-year service period.

Restricted stock, RSUs and stock options granted to nonemployee directors generally vest over a one-year service period.

As of December 31, 2024, 4,955,249 shares of common stock were reserved for issuance upon the exercise or vesting of outstanding stock-based awards granted under the Company’s equity incentive plans.

Any cancellations or forfeitures of awards outstanding under the 2023 Equity Plan, the 2014 Equity Plan or the 2001 Equity Incentive Plan, as amended (the 2001 Equity Plan) will result in the shares reserved for issuance pursuant to such awards becoming available for grant under the 2023 Equity Plan.

Any cancellations or forfeitures of awards outstanding under the 2023 Equity Plan or the 2014 Equity Plan will result in the shares reserved for issuance pursuant to such awards becoming available for grant under the 2023 Equity Plan.

As of December 31, 2024, the Company has either reserved in connection with statutory tax withholdings or issued a total of 5,981,915 shares under the Company’s equity incentive plans.

As of December 31, 2024, there were 2,184,830 shares of common stock available for future grant under the 2023 Equity Plan.

During the year ended December 31, 2023, the Company granted 523,783 restricted common stock units (RSUs) with a grant date fair value of $ 4.6 million and non-qualified stock options (NSOs) to purchase 1,974,978 shares of common stock with a grant date fair value of $ 9.7 million to employees under its equity incentive plans.

During the year ended December 31, 2024, the Company granted 250,968 restricted common stock units (RSUs) with a grant date fair value of $ 4.1 million and non-qualified stock options (NSOs) to purchase 581,658 shares of common stock with a grant date

fair value of $ 6.5 million to employees under its equity incentive plans.

The RSUs and NSOs granted to employees will vest over a three-year period from the applicable vesting commencement date.

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The restricted common stock and NSOs granted to non-employee directors vest upon the earlier of the date that is the one-year anniversary of the grant date or the day prior to the Company’s annual meeting of stockholders to be held in 2025.

On June 29, 2021, the Company also awarded 461,616 shares of restricted common stock to its chief executive officer with vesting subject to the achievement of certain volume weighted average common stock price targets, over a three -to- five year period.

The award had an aggregate grant date fair value of $ 6.5 million.

On June 2, 2022, the Company issued 53,590 shares of restricted common stock, pursuant to a performance-based restricted stock agreement, to each of certain employees, with vesting in tranches, subject to achievement of certain time and performance vesting conditions, as defined, over a three -to- five year period.

The equity awards had a total aggregate fair value of $ 4.0 million at the time of grant.

Stock-based compensation is included in cost of sales or operating expenses, as applicable, and consists of the following:

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Restricted stock awards issued to nonemployee directors generally vest in full one year from the date of grant.

During the year ended December 31, 2021, the Company also awarded 461,616 shares of restricted common stock to its chief executive officer with vesting subject to the achievement of certain volume weighted average common stock price targets, over a three -to- five year period.

The Company valued the shares using a Monte-Carlo simulation model to estimate the grant date fair value utilizing an expected volatility of 59.3 % and a risk free rate of 0.89 %.

The Company used a Monte-Carlo simulation model to estimate the grant date fair value utilizing an expected volatility of 63.4 % and a risk free rate of 2.92 % .

The following table provides detail of grants, vesting, and forfeitures of RSUs during 2024:

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Restricted stock awards granted during 2024 are considered issued and outstanding common stock and are excluded from the table above.

As of December 31, 2023, there were 881,674 shares of restricted stock outstanding of which 44,928 were granted to nonemployee directors, 461,616 shares of restricted stock outstanding granted to the Company’s chief executive officer and 375,130 shares of restricted stock outstanding granted to other employees.

As of December 31, 2024, there were 13,264 shares of restricted stock outstanding which were granted to nonemployee directors.

The total intrinsic value of restricted stock and RSUs that vested in 2024 and 2023 was $ 3.7 million and $ 1.3 million, respectively.

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As of December 31, 2024, total unrecognized compensation cost related to restricted stock awards issued to nonemployee directors of $ 0.2 million, and RSUs of $ 4.5 million is expected to be recognized over a weighted average period of 0.44 years and 1.81 years respectively.

As of December 31, 2023, total unrecognized compensation cost related to restricted stock awards issued to the Company’s chief executive officer and certain other employees of $ 4.1 million is expected to be recognized over a weighted average period of 1.08 years.

(16) CARES Act Payroll Tax Deferral

The Company elected to defer approximately $ 0.9 million of its employer payroll tax obligation for the period from March 27, 2020 to December 31, 2020 pursuant to the provisions of the CARES Act.

The Company was required to remit 50 percent of the deferred tax balance on or before December 31, 2021 and is required to remit the remaining 50 percent on or before December 31, 2022 .

As of December 31, 2022, the Company had remitted its repayment obligation.

(17) Net Loss Per Share

The computation of basic and diluted net loss per share consists of the following:

During the year ended December 31, 2021, the Company awarded 461,616 shares of restricted common stock to its Chief Executive Officer with vesting subject to the achievement of certain volume weighted average common stock price targets, over a three -to- five year period.

The Company valued the shares using a Monte-Carlo simulation model to estimate the grant date fair value utilizing an expected volatility of 59.3 % and a risk free rate of 0.89 %.

The Company used a Monte-Carlo simulation model to estimate the grant date fair value utilizing an expected volatility of 63.4 % and a risk free rate of 2.92 %.

On March 5, 2024, the Compensation and Leadership Development Committee (the Committee) of the Board of Directors of the Company approved the cancellation of the outstanding, unearned portion of the performance-based restricted shares granted to certain employees pursuant to the 2014 Equity Plan on June 29, 2021 (to Chief Executive Officer) and June 2, 2022 (to certain other employees).

The Committee determined that based on current market conditions, the likelihood of achievement of any of the remaining performance hurdles applicable to the unearned restricted shares is remote, and that the unearned restricted shares therefore had ceased to have incentive value for the grantees.

On March 6, 2024, the Company entered into cancellation agreements, pursuant to which the applicable employees agreed to such cancellation.

The cancelled unearned restricted shares were added to the number of shares available for awards under the Company’s 2023 Equity Incentive Plan.

For financial accounting purposes, the cancellation of the unearned restricted shares resulted in the immediate charge of approximately $ 2.2 million of unamortized stock compensation costs of which $ 2.0 million is included in the general and administrative expenses and $ 0.2 million is included in research and development expenses in the accompanying consolidated statement of operations.

(16) Net Income (Loss) Per Share

The computation of basic and diluted net income (loss) per share consists of the following:

Year ended December 31,

(In thousands, except share and per share data)

Weighted average shares outstanding, basic and diluted

Net loss per share, basic and diluted

Net income (loss)

Weighted average shares outstanding, basic

Weighted average shares outstanding, diluted

Net income (loss) per share, basic

Net income (loss) per share, diluted

Potentially dilutive common shares that were excluded from the computation of diluted net loss per share because they were anti-dilutive consist of the following:

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Convertible note, if converted

In the table above, the potential dilutive shares from common stock options, restricted common stock units, restricted common stock awards, and the convertible note were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented.

The potential dilutive shares from common stock options, restricted common stock units, restricted common stock awards, and the convertible note were excluded from the calculation of diluted net income (loss) per share because their effect would have been anti-dilutive for the periods presented.

The Company excludes the shares issued in connection with restricted stock awards from the calculation of basic weighted average common shares outstanding until the restrictions lapse.

For each of the years ended December 31, 2023, 2022 and 2021 , there was no dilutive impact of the common stock options, RSUs, and restricted stock awards.

(17) Income Taxes

The Company incurred net operating losses and recorded a full valuation allowance against net deferred assets for all periods presented.

Accordingly, the Company has not recorded a provision for federal or state income taxes.

The Company incurred net operating income for the year ended December 31, 2024 and net operating loss for the years ended December 31, 2023 and 2022.

The Company incurred net operating losses and recorded a full valuation allowance against net deferred tax assets for all prior periods.

Accordingly, t he Company has not recorded a provision for federal or state income taxes.

The Company recorded income tax expense of $ 1.7 million for the year ended December 31, 2024 associated with its Mexican maquiladora operations.

There was no respective income tax for the years ended December 31, 2023 and 2022.

The reconciliation between the U.S.

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Stock-based compensation

Expiring net operating losses

Research credits

State rate change

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The Company’s chief operating decision maker is the Chief Executive Officer.

The Company’s chief operating decision maker reviews consolidated operating results to make decisions about allocating resources and assessing performance for the entire Company.

The Company’s chief operating decision maker reviews consolidated operating results to make decisions about allocating resources and assessing performance for the entire

The Company reports two segments:

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We evaluate segment performance based on the segment profit (loss) before corporate expenses.

Summarized below are the Revenue and Segment Operating Profit for each reporting segment:

Summarized below are the Revenue, Cost of Goods Sold, and Segment Operating Profit for each reporting segment:

Cost of Goods Sold

(In thousands)

Energy industrial

Thermal barrier

Segment Operating Profit (Loss)

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Corporate expenses

Operating loss

Other expense, net

Operating profit (loss)

Other (expense) income, net

Income tax expense

Net income (loss)

Depreciation Expense

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(19) Subsequent Events

The Company has submitted a preliminary claim to the customer for reimbursement for estimated inventory and equipment losses incurred by the Company and its vendors due to potential obsolescence.

The customer’s ordinary course process is to audit the claim to determine the proposed reimbursable amount.

The Company expects the matter to be concluded by the second quarter of 2024, and currently estimates the potential impact to be in the range of zero to approximately $ 10.0 million.

In January 2024 , we entered into a sale and leaseback arrangement, pursuant to which we sold certain equipment to an equipment leasing company for a one-time cash payment of $ 5.0 million and leased back such equipment from the leasing company.

The associated monthly lease rents will be paid over the term of three years .

On March 5, 2024, the Compensation and Leadership Development Committee of the Company’s Board of Directors (the "Committee") approved the cancellation of the outstanding, unearned portion of the performance-based restricted shares granted to certain employees pursuant to the Company’s 2014 Employee, Director and Consultant Equity Incentive Plan on June 29, 2021 (to the CEO) and June 2, 2022 (to certain other employees).

The Committee determined that, based on current market conditions, the likelihood of achievement of any of the remaining performance hurdles applicable to the unearned restricted shares is remote, and that the unearned restricted shares therefore had ceased to have incentive value for the grantees.

On March 6, 2024, the Company entered into cancellation agreements pursuant to which the applicable employees agreed to such cancellation.

The cancellation of the unearned restricted shares resulted in an acceleration of the unamortized stock-based compensation charges of approximately $ 2.2 million.

The Company has evaluated subsequent events through February 27, 2025, the date of issuance of the consolidated financial statements for the year ended December 31, 2024.

In February 2025, the Company decided to cease construction at its previously planned second manufacturing plant in Statesboro, Georgia and demobilize the site.

The Company is in the process of assessing options to derive value from the assets, including potentially relocating certain equipment to improve and expand its existing manufacturing facility in East Providence.

In connection with the demobilization, the Company is no longer pursuing its application for a loan from the Department of Energy’s Loan Programs Office and has withdrawn from the loan application process.

The Company will assess the impact of the demobilization on the $ 332.4 million capitalized construction and interest costs.

If necessary, the Company will adjust the capitalized value to its salvage value in accordance with U.S.

The Company may incur additional costs associated with the demobilization of the site.

Further, the Company expects to write off deferred financing costs of $ 6.1 million incurred in connection with pursuing financing for the construction of the plant.

VALUATION AND QUALIFYING ACCOUNTS

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis